The economist specialized in Social Security issues Arismendi Diaz Santana warned that keeping the limit of salary exempt from Income Tax frozen since 2017 has become “a tax punishment“which affects almost a million middle-income workers and worsens social inequality in the country.
Díaz maintains that the State’s decision to suspend the automatic indexation ordered by the Tax Code each year “denies a right essential”, increases the tax burden on wage earners and erodes confidence in democratic institutions.
As he explained, the article 296 of the Tax Code requires the exempt amount of ISR to be updated annually according to inflation. However, this update has been suspended for eight years, which has caused 924,956 workers pay more taxes than they should.
According to his calculations, in 2026 employees will lose 13,764.3 million of pesos for taxes that, he assures, are “undeserved” and will have no guarantee of return in the form of public services.
Added to this burden are 40,000 million pesos in out-of-pocket family spending, an impact that, he affirms, severely reduces the purchasing power of the middle class.
Díaz says that this policy is worse when compared to other sectors. It points out that companies and corporations adjust each year for inflation, exchange rates and asset valuation, while salaries remain frozen at an exemption limit of 34,685 pesos, when – according to the Regional Business and Social Council (CRES) – it should have risen to 52,151 pesos, a difference of 17,466 pesos. Between 2017 and 2025, the accumulated inflation was 41.34%.
The political debate
He Senator Omar Fernández has demanded Government abide by the law and update the exempt salary scale. He rated as “illegal practice and unfair” the annual suspension of the adjustment, which amounts to ten consecutive years.
The president Luis Abinader has publicly acknowledged that indexing “is fair and necessary,” but warns that its full application would reduce state income and would force sensitive items to be cut. He GovernmentAccording to what he said, he is studying ways to apply it “in the most balanced way possible.”
The Minister of Finance and Economy, Magin Diazestimated that updating the exempt salary “suddenly” would imply a reduction of around 25,000 million pesos in collections. He proposed a gradual application so as not to compromise fiscal stability.
Objections to the official position
The economist Nelson Suarez He questioned the magnitude of the impact presented by the authorities. In his evaluation, the tax reduction would be around 13,764.3 million, a figure that—according to him—would be compensated by a higher consumption in the economy due to tax relief for employees.
Suárez also pointed out that the freezing harms almost 200,000 pensionerswhose income has not been indexed for more than a decade, despite the fact that its purchasing power has deteriorated significantly.
An “unsustainable” situation
For Arismendi Diazthe maintenance of this fiscal policy generates “impotence, resentment and loss of confidence“in democratic institutions. He describes it as a practice that favors groups with power of influence at the expense of workers without the ability to pressure.
In his opinion, the country needs a tax reform comprehensive that eliminates privileges and restores equity in the tax system. He points out that the Government “You can’t carry that injustice“and that citizens expect a definitive solution to the freezing of exempt salary.
