Overview during a public session of the Senate at the National Congress
The Budget project extends the power of the Executive Power to update the Irpef salary plan and the exemption from the Christmas bonus for employees in dependency in 2023.
The Earnings salary plan was an initiative of Sergio Massa, when he was head of the Chamber of Deputies, and was set at $ 150,000 in gross salary through a law passed in late March 2021.
That law provided that the executive branch could extend it during the year based on higher inflation and wage increases. So it was raised to $ 175,000.
The rationale for this measure was that Earnings’ minimum wage allowed Earnings to keep the number of workers below 940,000. And that the goal was not to expand that universe.
For those 940,000 there has been no change – with a non-taxable minimum that remains fixed throughout the year despite very high inflation. According to the Government, it corresponds to hierarchical and “non-contracted” personnel, with a much higher remuneration.
This year the minimum wage started at $ 225,937, and as that power was extended for 2022, it was raised to $ 280,792 after a counterpoint between Massa and former minister Martin Guzman. The increase is equivalent to the increase in the RIPTE (Taxable Remuneration for Stable Workers) salary index between October 2021 and March 2022.
But once again that plan is out of date and in Economics now they say they will update it starting in October. Is that during April-July, the RIPTE increased by 22.8%, so the minimum wage of $ 280,792 should be $ 344,812. And whoever earns between this value and $ 398,095 would pay less earnings to avoid a jump in the tax payment.
Above $ 398,095 there would be no benefit and they will continue to be taxed more because the non-taxable minimum (MNI) remains at the same January value throughout the year, as set by the Income Act, when the inflation and salaries exceed 95%.
For this segment of workers, the MNI is a monthly average of $ 112,682 for a single person with no children and a monthly average of $ 149,063 for a married person with a spouse and 2 children. This is paid Earnings for the difference between what they earn and those values, a gap that widens as incomes rise and those lows remain unchanged between January and December.
For this reason Gabriela Russo, head of the Professional Council of Economic Sciences (CABA), suggests updating not only the salary plan, but also and with the same frequency, depending on inflation, the non-taxable minimum and the special deductions of all workers and self-employed so that there are no distortions in the system.
This is the case of pensioners and pensioners because they have an MNI equal to 8 minimum salaries which, since September, have been equivalent to 346,824 dollars, with which they have an automatic quarterly adjustment based on the increases in the mobility formula.
This MNI applies if certain conditions are met, such as not receiving other income and not being covered by personal assets. However, the same “floor” wage value applies even if this MNI of 8 minimum wages does not match them.
Tax expert Sebastian Dominguez argues that “in the current inflationary scenario, the quarterly update of the amounts from which employees pay profit as well as with respect to self-employed workers and tax tables is essential”. But he adds that “the update should be automatic by law considering the change in the Consumer Price Index (CPI) rather than the change in the RIPTE, which is the parameter considered today”.
Dominguez clarifies that “the Budget project does not provide for that automatic updating, but rather extends that power of the Executive Power to do so in a discretionary manner and only with respect to employees in a dependent relationship. It is a new patch that solves the problem of a few contributors. The reality is that a comprehensive income tax reform is needed ”.
Ishmael Bermudez
Source: Clarin
