2023-11-01 06:55:10
Facilities in IT, construction, agriculture or the food industry are changed starting today – November 1, 2023. For many people, it means lower incomes if the companies they work for do not increase their amounts. Basically, more money goes to the state.
Romanian banknotesPhoto: Inquam Photos / Octav Ganea
It should be noted that from November 1 we also have a change in the minimum wages for construction, agriculture and the food industry, but all that money will go to the state. Employees so paid will receive the same money in hand.
That is, the minimum net salary in construction will also be 3,150 lei, and that in agriculture and the food industry 3,436 lei. The reason is related to the fact that now those employees must pay CASS (amendment introduced by Law 296/2023). They are left with only income tax exemption.
According to data from the Ministry of Labor, 423,110 employees in those sectors want the same money from November, even if their gross is increased. That is, the increase is only for the state, to collect more.
According to estimates, 423,110 employees will benefit from the increase in the gross minimum wage in the construction sector, and 168,000 employees in the agricultural sector and the food industry, according to the estimates, the Government stated.
What employees in construction, agriculture and the food industry will have lower wages
Obviously, not all employees in construction, agriculture and the food industry are paid the minimum wage. If we exclude those with the minimum salary, approximately 350,000 – 400,000 have up to 10,000 lei. For these employees, it means a decrease in salary, if the company compensates them for the amounts that go to the state (that 10% from CASS).
The average gross salary gain in August (latest data) in the construction field amounted to almost 6,000 gross lei. Suppose a person was paid with that amount, which meant that he had 4,725 lei in hand.
From November 1, he will receive 4,125 lei, so 600 lei less.
2. In agriculture, the average gross salary was around 5,500 lei gross, which means that an employee paid the amount received 4,331 lei. From November 1, he will receive 3,781 lei, so 550 lei less.
It would have been ideal if these exemptions introduced by GEO 114/2018 did not exist in order to avoid situations like today. That’s why exemptions are not good: when they withdraw, discontents arise.
The point is that someone has to pay the “bill”. All other workers in the economy paid for the health services they used. The Ministry of Finance has frequently mentioned in reports that the budget is affected. The money that is not collected, is borrowed. So they will be paid to these facilities in the future.
In IT, some employees will have a higher net and others a lower net
The tax changes related to the IT sector are somewhat more complex than in the areas listed above. When we refer to this field, we are strictly talking regarding employees.
At one point a state secretary from the Ministry of Finance said that there were approximately 90,000 employees. Later, budgetary IT-scientists were also introduced into the legislation, there are probably a few thousand more in addition to the others.
The rest work through PFA and micro-enterprises (there are changes here as well, but they come into effect from January 1 – probably many licensed individuals will migrate to micro-enterprises).
The average gross salary in August for salaried IT-scientists amounted to 14,453 lei. This means that they received (net) 9,392 lei.
After the tax changes, starting from November they will receive 9,466 lei. That means they will have a small salary increase.
However, if someone earned 20,000 lei, then instead of 13,000 lei, he will receive 12,706 lei. That is, he will experience a decrease in income.
It seems strange, but it is not, if we look at the tax changes. This happens because of two things:
1. IT professionals are exempt from income tax only for 10,000 lei, anything over this amount is taxed at 10%
2. IT-scientists are automatically exempt from the contribution to Pillar II of pensions of 3.75% for 10,000 lei. The amount in excess has a normal CAS of 25% (instead of 21.25%).
However, if IT professionals wish to continue contributing to Pillar II for the 10,000 lei and submit a request to the employer, they will receive a net lower salary. Yes, they will be affected later in retirement, but this is regarding everyone’s financial knowledge, personal outlook on the future and current need for money. They can choose to transfer that money to a Pillar III, or to an investment fund if they are thinking long term.
See also: Pillar II exemption for IT professionals: tax experts have different interpretations / What you need to know
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