President Luiz Inácio Lula da Silva confirmed today (16) that the government will raise the minimum wage to R$1,320 in May. On the same occasion, according to Lula, the new Income Tax exemption range should be announced, which will increase from R$ 1,903.98 to R$ 2,640.
Currently, the minimum wage is R$ 1,302, according to provisional measure issued in mid-December by the previous government. This value considers the variation in inflation measured by the National Consumer Price Index (INPC), plus a real gain of approximately 1.4%.
However, the amount approved by the National Congress in the General Budget of the Union for 2023 is BRL 1,320, but, for it to come into effect, it depends on a new provisional measure from the Executive. The government’s concern is with the lack of resources to pay for the new value and a proposal is being negotiated by the economic team.
Despite the fact that the Constitutional Amendment of the Transition guaranteed R$ 6.8 billion for the minimum wage of R$ 1,320, the strong release of retirement and pensions from the National Institute of Social Security (INSS) in the last months of last year resulted in a tax higher than expected. Several social and labor benefits, such as unemployment insurance, PIS/Pasep allowance, the Continuous Cash Benefit (BPC) and others, are also linked to the national floor and must be corrected.
“We are raising the minimum wage to R$1,320 in May and we are going to recover the rule in which the salary, in addition to inflationary replacement, will have GDP growth, because it is the fairest way to distribute economic growth”, he wrote, in publication on social networks.
For the president, the minimum wage needs to rise according to the growth of the economy, equivalent to the increase in the Gross Domestic Product (GDP, sum of goods and services produced in the country). To this end, in January, he set up a working group to prepare a proposal dealing with the Minimum Wage Appreciation Policywhich will bring a permanent calculation formula for the national floor.
In 2007, during the first Lula government, an appreciation policy was agreed upon, which was abandoned in 2019. It provided for the readjustment of the minimum wage contemplating the INPC of the previous year plus the GDP of 2 years before.
According to the Inter-Union Department of Statistics and Socioeconomic Studies (Dieese), in January 2023 the minimum wage needed to meet the basic needs (food, housing, clothing, education, hygiene, transportation, leisure and social security) of a family of four should be BRL 6,641.58.
Income tax
Also on social media, Lula confirmed the readjustment of the income tax table (IR). According to the president, the exemption range will go from R$ 1,903.98 to R$ 2,640 and will progress until it reaches R$ 5 thousand.
The lack of correction of the table in recent years will mean that, in 2023, people who receive a minimum wage and a half will have to pay tax for the first time. The last update was made in 2015. With the minimum value at R$ 1,302, those who earn a salary and a half earn R$ 1,953, therefore above the exemption range.
The correction of the income tax table is one of the central points in the economic agenda of the new government and Lula’s campaign promise. This week, the Minister of Finance, Fernando Haddad, informed that the portfolio has already finalized the proposal for the income tax readjustment.
“And we are going to start exempting income tax from R$2,640. And we will progress until we reach R$ 5 thousand. When we go to discuss income tax, we realize that those who earn BRL 6,000 pay proportionally more than those who earn more”, wrote the president.
