Sergio Palazzo, the leader of the banking union and a national deputy, has announced plans to challenge the reinstatement of the fourth category of the Income Tax through legal action. This new regulation was implemented as of Monday, and it is expected to significantly impact the workers in his sector.
Due to the salary levels of banking employees, Palazzo’s union is among those most affected by the elimination of this tax category. He asserts that they have already prepared a legal complaint, describing the move as confiscatory and a disguised reduction in salaries. According to him, approximately 95% of banking workers will be subject to the new Income Tax due to recent changes included in the fiscal package. He promised that they would file their case in court “by tomorrow at the latest.”
Palazzo highlighted the struggles of many workers, using an example of a person who, after separation, has to pay child support while only netting 1.2 million pesos after deductions. Faced with child support payments of 300,000 to 400,000 pesos, this individual would find it illogical to be taxed on the remaining amount, leaving them with less than the poverty line threshold.
Under the new regulations, established by decree 652/2024, employees earning over 1.8 million pesos monthly will start paying taxes. For married individuals with two children, the threshold is set at 2.2 million pesos. The tax rates will vary between 5% and 35%, potentially affecting around 800,000 workers.
Moreover, personal deductions and the income tax brackets will adjust every six months starting in 2025, based on the Consumer Price Index (CPI) variation reported by Indec. These changes are estimated to contribute about 0.43% of Argentina’s GDP to public finances.
Palazzo mentioned that certain income brackets could lead to deductions as high as 16%, with the total withholding sometimes exceeding 20%, encompassing all legal and non-legal withholdings. Therefore, he reiterated the plan to pursue legal action, which had been in preparation since the previous week. They awaited confirmation of the income thresholds for tax exemption before proceeding.
The union is seeking the legitimacy for La Bancaria to litigate rather than placing that burden on individual workers, as nearly 95% of them will be affected by this tax change. With the latest banking sector agreement, the initial salary has reached 1,296,473 pesos, plus a profit-sharing component, raising the total to approximately 1,343,320 pesos.
In the recent communications following the agreement, Palazzo stated that they negotiated a salary increase equivalent to the inflation rate recorded in June, based on May salaries. The compensation will reflect the cumulative inflation from January to June 2024, compared to December 2023 salaries, which had an increase of 71.9%. Any necessary adjustments will be issued alongside July wages.
Additionally, the bonus for Banking Day has been set to a minimum of 1,155,761.17 pesos, subject to future inflation adjustments.
Image and News Source: https://www.infobae.com/economia/2024/07/22/el-gremio-bancario-ira-a-la-justicia-para-reclamar-la-restitucion-del-impuesto-a-las-ganancias/
