The more than 742,000 state workers will receive a salary bonus of at least 30.5 euros from May 20, on top of paying retroactively for the extra increase of 1% for the first four months of the year. This additional salary will not be subject to withholding tax, according to the bill presented this Wednesday to trade union structures (Fesap, Frente Comum and STE) by the Secretary of State for Public Administration, Inês Ramires.
It means, for example, that the approximately 124 thousand civil servants, almost 17% of the total, with a minimum wage of EUR 761.58 will receive EUR 30.5 next month, since they do not have to make discounts for the tax authorities. This amount corresponds to an additional increase of 1%, which translates into 7.62 euros per month, between January and April, according to calculations by Dinheiro Vivo.
For more than 126,000 employees, about 17% of the civil service universe, who earn 861.23 euros, the wage bill increased by 34.4 euros in May. For an average base salary, which according to the latest statistics from the General Directorate of Administration and Public Employment (DGAEP) amounted to 1567.2 euros, the bonus will amount to 62.7 euros. More than 163,000 workers should be at this salary level, or about 22% of public employment.
From this level and as wages rise, so does the amount of back payments. So, taking into account the last position of the Single Remuneration Table (TRU), with the highest gross monthly salary of EUR 6555.6, the additional amount to be paid to these employees in May will be EUR 262.2, which corresponds to the salary increase of 1% or 65.56 euros for January, February, March and April.
The increase in the meal allowance to €6 for the first four months will also carry over to the next month, resulting in an additional €3.2 per day.
The retroactive effect of the increase in the meal allowance from 0.80 euros to 6 euros per day in the months January to April will also be paid in May, i.e. State workers will receive a total of 3.2 euros more support for the following month: the amount is 9.2 euros/day or 202.4 euros for the 22 working days in total.
The salary increase and food subsidy for the first four months of the year will be processed from May 20, the date the transfer order is credited to the employees’ account.
Civil servants receive the extra increase without deduction. But before that, the government will have to publish a regulation that excludes this income from the IRS table regime. Luís Leon, tax advisor at ILYA, explained to DN/DV that “all income from employment in the state or in the private sector is subject to IRS, i.e. withholding tax tables must be adhered to”. For that reason, he considers “the government’s decision to be fiscal nonsense”.
The unions of the UGT (Fesap and STE) have a position that is opposite to that of the tax specialist. Both the Secretary General of the Public Administration and Entities with Public Purposes Union Front (Fesap), José Abraão, and the President of the State Technical Staff Union, Maria Helena Rodrigues, praised the measure at the end of Wednesday’s Monday meeting. because it allows for “greater liquidity for officials,” the STE leader justified.
Despite this apparent initial tax exemption, next year, at the time of filing the annual IRS return, a settlement will occur and these employees may be required to pay taxes.
No IRS needs to be withheld retroactively, but the wage increase applied from May will be subject to withholding tax. To ensure that this increase effectively equates to a net wage increase, the government reassured this Wednesday that the IRS tables will be updated to accommodate the 1% increase and thus avoid penalizing workers.
“The corrected tables will be known in May and will be out in time for the increases to be paid,” revealed Fesap’s general secretary. According to José Abraão, this tax reduction will be in effect for two months, in May and June, because from the second half there will be a new model of IRS tables, following a marginal rate logic, in line with the levels taken into account for the annual settlement of the tax, which will lead to a reduction in the withholding. According to DV accounts, if the government does not update the tables in May, civil servants with an income of up to about EUR 870 gross per month risk losing up to EUR 12 per month, in the case of single people without children.
This is the second change to the IRS tables in four months. In January, after the entry into force of the salary increases in the government, from EUR 52.11 for gross wages to EUR 2612.03 or 2% for higher salaries, the Ministry of Finance had to make an initial adjustment to prevent the increase from being absorbed by the tax. The additional 1% for all government employees raises the issue again, as current withholding rates bring net losses.
The round of negotiations on the extra 1% salary increase ended this Wednesday after three meetings, with the government closing the door to higher salary increases. The Common Front, of the CGTP, continues to defend increases of 10% with a minimum of 100 euros for all workers. The STE even suggested that the additional increase be 1.5%, 0.5 point above the government’s proposal, but without success.
Salomé Pinto is a journalist for Dinheiro Vivo
Source: DN
