Getty Images Hacienda's Cold Shower for Millions of Spanish Workers: Imminent Turn
The Treasury has announced, after many days of speculation, changes that will affect many employees in Spain
One Step Forward, Two Steps Back for Millions of Spanish Workers. The recent increase in the Minimum Interprofessional Wage (SMI), announced with much fanfare by the Government of Spain, comes with fine print. Although a 4.4% increase was announced, setting it at 1,184 euros gross in 14 payments, this increase is joined by an unexpected tax change.
For the first time, according to TV3, workers who receive the SMI will have to pay income tax (IRPF). Until now, employees with the minimum wage were exempt from this tax. However, the Ministry of Finance has decided that, with the new increase, these earnings will become part of the taxable base of the IRPF.
This measure will affect about three million workers, according to government estimates. Ultimately, an unpleasant surprise for many employees and a significant shift in the fiscal policy applied so far.
More Than Evident Impact on Many Salaries
The impact of this new taxation on workers' pockets is evident. Although the announced increase is 50 euros per month, in practice, the IRPF withholding will reduce this increase. Workers will pay approximately 15 euros per month, leaving an effective improvement of only 35 euros.
Samuel Cruz, a tax advisor, pointed out in the cited media that this change will largely neutralize the effect of the SMI increase. Especially considering the impact of inflation and the rising cost of living. "It would be more logical for the lowest incomes to remain exempt from the IRPF," he stated.
Meanwhile, the Ministry of Finance, led by María Jesús Montero, has justified the decision. They indicate that if the IRPF brackets are not updated, up to 2 billion euros in revenue would be lost. This figure has been key in the debate within the Executive, as Vice President Yolanda Díaz advocated maintaining the IRPF exemption.
With the Unions Against
The decision by the Ministry of Finance has also raised concerns among the unions. The general secretary of UGT, Pepe Álvarez, lamented that "it doesn't make sense for those who received the SMI last year without paying IRPF to do so now." The unions are calling on the government to find a solution to prevent workers with lower incomes from bearing a disproportionate fiscal burden.
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