Treasury Department Set to Veto Law Exempting Minimum Wage Earners from Income Tax
The Ministry of Treasury is poised to veto a legislative proposal put forth by the Sumar party aimed at exempting individuals earning the Minimum Interprofessional Wage (SMI) from income tax obligations (IRPF). This decision comes amid ongoing conflicts between Treasury Minister María Jesús Montero and Yolanda Díaz over this contentious issue.
A month ago, Sumar introduced its bill in the Congress of Deputies, seeking to ensure that those receiving the SMI, which recently rose to 1,184 euros distributed across 14 payments, would not be subjected to income tax. This legislative effort gained attention after the Treasury acknowledged for the first time that these wage benefits would indeed be taxable.
Similar proposals have also been registered by the opposition Peoples Party (PP) and the left-wing Podemos party, indicating a broader interest in reexamining the tax burdens on minimum wage earners. However, the Treasury is expected to veto all proposed measures, arguing that such actions would lead to a significant decrease in state revenues.
The possibility of overturning such a veto exists, but it would require an unlikely coalition between the PP and Sumar, resulting in a contranatural alliance that could further strain the already fragile coalition government. This tension is underscored by ongoing disputes concerning increased defense spending.
Montero has defended her stance, clarifying that only 20% of SMI recipients would be subjected to these tax withholdings. This group primarily includes single or separated individuals without children or financial burdens, as well as couples filing taxes individually, particularly those with up to one common child. Moreover, Montero highlighted that most European Union countries impose taxes on minimum wage earners, suggesting that Spain's approach aligns with broader regional practices.
According to calculations from the General Council of Economists (CGE), the withholding amounts for a single taxpayer without dependents will vary dramatically by region, with annual withholdings ranging from approximately 280.67 euros in the Valencian Community to 357.43 euros in Catalonia.
As the debate unfolds, the question remains: can there be a resolution that addresses both the revenue needs of the state and the financial burdens on its lowest earners? With political factions deeply divided, the outcome of this critical financial and social issue remains uncertain.
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