The state’s minimum wage, which will rise to $769.2 in May thanks to the 1% salary increase, will be deducted from the IRS for the first time in history. As promised, the government updated the withholding tax tables to accommodate the additional increase, through an order signed on Tuesday. But it did not exempt the Basic Public Administration Allowance (BRAP), which is higher than the minimum wage in the private sector (760 euros). For example, the approximately 124,000 civil servants (16.7% of the total), with the lowest salary, withhold 0.6% or 4.62 euros per month, according to calculations by Dinheiro Vivo, based on the new IRS withholding tables, which of take effect in May and June.
The general secretary of the Public Administration and Entities with Public Purposes Union Front (Fesap), José Abraão, revealed to Dinheiro Vivo that he has already reported the matter to the government and asked for an explanation. “The tables have always exempted the pay base for civil servants from withholding, it is not clear why employees in this position are now going to deduct it,” criticized the union leader.
Once these employees start withholding, they will also be entitled to deductions for general expenses next year, with care, education and housing rent, when it comes time to complete the IRS return, a possibility that it was prohibited for them because they didn’t give a discount. This means that they now advance the tax to the State, but may be eligible for a refund in 2024.
For example, employees with a gross monthly wage of EUR 769.2 will receive a net EUR 764.58 in May and June, excluding the 0.6% or EUR 4.62 per month for the IRS, resulting in a net monthly profit of EUR 3.3. euros compared to the current salary of 761.58 euros (see table). If Finance had not corrected the tables, these employees would have run the risk of losing their salary by EUR 7.76 to EUR 753.82. Fiscal neutrality, claimed by the unions and guaranteed by the executive, is being fulfilled. However, and in the concrete case of the lowest salary level, the net increase appears to be the lowest compared to higher wages.
The DV accounts, based on the new IRS tables, were run for a single worker with no children and without taking into account the 11% Social Security contribution.
Those who move up in the Single Remuneration Table (TRU) of the National Office will receive a gross salary of EUR 809.13 from next month, which amounts to a gross salary of EUR 817.22 from next month. By updating the tables, these employees can receive less discount: 4% (32.69 euros) instead of the current 7% (57.21 euros). In the end, they get a real increase of 7.77 euros to 784.53 euros compared to the current net salary of 776.76 euros. If the withholding tax would not be changed, the already net wage would be reduced by EUR 16.75 to EUR 760.01.
As the salary increases, between the third and fourth salary level, the net monthly salary also increases to 8.69 euros. Without the correction of the tables, these salary levels would be reduced net by EUR 11.94, in the case of a gross salary that increases from EUR 861.23 to EUR 869.84, and EUR 13.64, in the case of a salary that grows from 955.37 to 964.92 euros. Only in the fourth remuneration level, which goes from 899.77 to 908.77 euros, no adjustments had to be made: the retention percentage of 9.3% is maintained and yet there is a net profit of 8.16 euros.
It should be remembered that the additional increase of 1% retroactive to January will be paid on May 20, together with the salary, and will not be subject to withholding tax, guaranteed the Secretary of State for Public Administration, Inês Ramires, on April 12 , when the renegotiation of the Long-Term Agreement on Valorisation of Civil Servants was concluded. It means that the more than 742 thousand employees will receive a net bonus of at least 30.5 euros next month, the extra that will be transferred to the bank account of those who are with BRAP and who earn 769.2 euros gross per month. Despite this apparent tax exemption, next year, at the time of the annual IRS filing, there will be a settlement and these employees may be required to pay taxes.
Pensions and salaries without deduction up to 765 euros
The new IRS tables show that the executive has made adjustments to the first five scales of gross monthly remuneration: the exemption went from EUR 762 to EUR 765 and will also apply to pension income; between this amount and 790 euros, the rate fell from 2% to 0.6%; the third tier, which kept the retention of 4%, was increased from 812 to 819 euros; the fourth level continues with a rate of 7%, but increases the covered income from 863 euros to 870 euros; and the fifth tranche, with a deduction of 9.3%, was extended from 964 to 965 euros. Nine other scales were also changed, between 1280 and 6085 euros gross per month, keeping the respective rates but expanding the limits of the covered income.
From July 1, the tables will change again and a new model will come into force, following a marginal rate logic, in line with the brackets taken into account for the annual tax settlement, which will lead to a reduction in the withholding.
Salomé Pinto is a journalist for Dinheiro Vivo
Source: DN
