Increase in the minimum wage or desire to collect more?

The announcement of the increase in the minimum interprofessional wage (SMI) by 50 euros to reach 1,184 euros gross per month in 14 payments has come with a surprise: it turns out that for the first time a part of its recipients will have to pay taxes to the Treasury, something that had never happened before. Previous increases in the SMI were always accompanied by adjustments in the exempt minimum to avoid the IRPF eating up part of the increase. However, on this occasion it is estimated that 20% of recipients, half a million people throughout the State, will have to pay part of that money to the Treasury. Specifically, these are single people without children, who depending on the autonomous community of residence will have to return to the Treasury up to half of the increase, as is the case of Catalonia. That is, unlike the remaining 80%, their real increase could be reduced to 25 euros per month.

The decision has provoked the indignation of Sumar and, curiously, also of the PP, which sees it as proof of the Spanish government's voracity in tax collection. The Minister of Finance, María Jesús Montero, did not even want to negotiate the issue, according to the Minister of Labour, Yolanda Díaz. Doing some quick numbers, it can be seen that with the increase in the SMI, the Spanish government will collect some 2,000 million extra (from the salaries that companies must pay), a figure that would compensate for the loss of the tax on large energy companies, overturned by Junts and the PNV, and which subtracts 3,000 million.

However, in this case, the lowest incomes are being taxed, so it is a measure that is not very redistributive and contrary to the values that the progressive government of Pedro Sánchez claims to defend. And even though this is a government that rightly champions the need to pay taxes, it ignores the fact that redistribution can also be achieved by lowering taxes for low and middle incomes. This lack of flexibility, or even dogmatism, was already seen in its day with the refusal to accept measures such as the deflation of personal income tax to compensate for the impact of inflation on taxpayers, which Sánchez and Montero identified as a right-wing measure, although some men socialists, like Ximo Puig, put it into practice.

It is really hard to understand why the Spanish government is allowing this controversy to tarnish one of its main assets, which is having shown that raising wages through the SMI lever does not destroy jobs, but on the contrary: it boosts the economy because it increases domestic consumption. It could be argued that 25 euros a month does not make anyone poorer or richer, but that is not the point, but rather knowing what message is being sent to the population. And here it is not clear whether, with the excuse of helping the most disadvantaged segments, they are not also seeking to increase the State's revenue. In this sense, Montero should be more generous and, above all, more politically skilled so as not to turn a victory into a defeat.