If the government’s proposed increase in the minimum wage is maintained from 705 to 750 euros in 2023, the minimum livelihood, i.e. the level to which the Portuguese are exempt from IRS, will skyrocket by 630 euros, from 9,870 to 10,500 euros per year. , in 2024, the year the income tax will be paid in 2023. That means that in two years about 2.5 million employees (or a quarter of the population) will be free to pay IRS.
Tax changes not to penalize salary increases, and IRC cuts as a counterpart to companies valuing employees, will be some of the issues the executive must present to employers and unions this Wednesday, under the Competitiveness and Income Agreement, at headquarters of social consultation.
With regard to the evolution of the minimum guaranteed remuneration and taking into account a galloping inflation, which could reach 7.7% this year, according to the Finance Council, the government will even be able to go above 750 euros next year, as UGT and CGTP claim. . And then the subsistence minimum would also go up. According to the IRS Code, this ceiling is obtained by applying this formula: 1.5 x 14 x the value of the IAS, which is 443.2 euros. However, the same law says that the minimum subsistence should never be less than the minimum wage times 14 months. Because the minimum pay is higher and has risen more than the IAS, this benchmark is used.
For example, if the government were to apply the 7.7% increase in the minimum wage, this value would rise to EUR 759, nine euros more than expected, raising the minimum wage to EUR 10,629.9. UGT can even accept it, as the secretary general of the trade union federation, Mário Mourão, has already stated in an interview with DN/TSF that the “red line to increase income should not be less than 7%”. But the CGTP is much more ambitious and is already demanding an increase from almost 95 euros to 800 euros by 2023.
Regardless of the evolution of the minimum wage for next year, the Treasury Department will have to make surgical changes to the minimum wage already this year and effective 2023, namely to avoid a fine for retirees who are exempt from IRS and that, by through the bonus of another half pension they receive in October, they may have to pay taxes next year. Speaking to Lusa, the Treasury Department said that “the government is finalizing the proposed amendment to this mechanism, which is due to be tabled shortly. This proposal will prevent all cases of gross income increase that do not correspond to net increases “that is, incomes close to the national minimum wage”.
In two years, about 2.5 million Portuguese (or a quarter of the population) will be exempt from paying the IRS.
On the side of the employers’ federations, the government will be pressured to lower the tax burden, especially the IRC. António Saraiva, president of CIP – Confederação Empresarial de Portugal, was confident in a cross-cutting tax cut from 21% to 19% after Economy Minister António Costa Silva admitted a global decline in the IRC. But days later, the Treasury Department showed signs that the government is speaking with one voice, and that is in the sense that it is fiscally beneficial for companies that raise wages and reinvest profits, according to the government’s Great Plan Options for 2022. – 2026, for which DN/DV had access.
For the Confederation of Commerce and Services (CCP), the crosscutting cut of the IRC is not a priority, as less than 40% of companies pay this tax, as the DN/DV reported. The president of the CCP, João Vieira Lopes, reveals that “the Portuguese business fabric is essentially made up of micro and small businesses that have no profits to tax”. Rather, Vieira Lopes defends “a reduction or even the end of autonomous taxes” that affect corporate spending, such as cars or representation costs. “The government contribution must include tax benefits that are cross-cutting for all businesses and consumers, because that is the only way to increase net income.” Vieira Lopes also warns that the Competition and Income Agreement should take into account not only productivity and inflation, but also the evolution of the economy, which is expected to reverse in the coming years.” The Public Finance Council improved the outlook for GDP growth for this year, to 6.7%, but lowered next year’s, now forecasting a sharp slowdown of 1.2%.
Less than 15 days before the delivery of the 2023 State Budget (OE) proposal, social partners and the government are sitting around the table to start negotiations on a social pact that will raise not only the minimum wage, but also the average and in return a tax relief for employers. The deal should not be concluded before the DE, but the meetings with the social partners should already give signals to the executive on the measures taken in the budget proposal.
Salomé Pinto is a journalist for Dinheiro Vivo
Source: DN
