Spanish Finance Minister Proposes Measures to Compensate Low-Income Workers After Minimum Wage Hike
On Tuesday, Maria Jesus Montero, the First Vice President and Minister of Finance of Spain, announced that her office is negotiating with the Sumar party to formulate measures aimed at compensating a small group of workers who will have to pay income tax (IRPF) following the recent increase in the Minimum Interprofessional Wage (SMI). Montero emphasized the goal of establishing a proposal that could alleviate the tax burden for these affected workers, albeit few in number, due to the increase in SMI.
As per calculations from the Ministry of Finance, it is estimated that only 20 workers receiving the SMI will be subject to withholding taxes as a result of the approved wage increase for 2025, which sets the monthly SMI at 1,184 euros for fourteen payments. Both the Sumar party, Podemos, and the PP have put forward legislative proposals in Congress aimed at exempting SMI from income tax. However, the socialist faction of the government intends to veto these proposals based on budgetary concerns. The deadline for registering objections to these legislative proposals is Friday afternoon.
In a bid to prevent a potential clash at the Congress table, the Ministry of Finance has offered Sumar various measures to accommodate these beneficiaries of the SMI. However, Montero has firmly reiterated her stance on keeping the SMI increase separate from any tax exemptions. For her, there are two distinct discussions: the first pertains to the growth of the SMI, which increases the earnings of this worker demographic, while the second revolves around the threshold for paying the IRPF. Montero affirmed that the government’s priority is to construct a fair taxation system.
"If we aim for wages to continually rise, we need to correspondingly adjust the economic capacity that workers possess," Montero defended, signaling that while wages should ascend, consideration must also be given to the corresponding tax implications. The negotiations between the Finance Minister and Sumar demonstrate the ongoing dialogue within the government around ensuring fair compensation and equitable taxation for low-income workers in a changing economic landscape.
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