The middle class tax cuts are set to expire this year, raising taxes on our families. In these tough economic times we must keep the tax burden off of middle class families, so they can continue to feed their children and pay their mortgages. I will fight to keep these tax cuts for middle class families.
These days, much has been written and even more has been said about the proposed reform of the income tax law. And everything that has been said responds to how each one is doing with said reform. For employees with salaries between 330 and 500 dollars, the reform is beneficial to the extent that it will free them from paying income tax and the cumbersome annual process of requesting the refund of withholdings. These measures of justice, since they benefit a large group of the population that has few resources to meet their needs. But this does not mean that this social sector will not pay any type of tax. Like all Salvadorans, you will continue to pay VAT, 13% on each purchase you make and each service you request. A tax that is not negligible and that contributes 63% of its fiscal income to the State.
The salaried employees of the next tranche, those who receive between 500 and 2,000 dollars a month, view the reform with indifference, because in reality it does not affect them: they will continue to pay the same as at present. On the contrary, the group that receives salaries above 2,000 dollars and up to a maximum of 5,000, according to calculations by the Ministry of Finance, will experience an increase in the payment of rent of just 10 dollars each month. Despite this, FMLN spokesmen say that this sector, as it constitutes the country’s middle class, should not be affected by the tax reform. But more than defending the interests of the middle class, the Front is defending the interests of many of its political cadres who receive salaries of that order.
It would take a long exposition to refute or affirm that the sector that earns a monthly salary of between $ 2,000 and $ 5,000 is or is not middle class. Suddenly it is not the same to have an income of more than 10 times the minimum wage than to have an income of more than 20 times the minimum wage. The one who earns $ 2,000 per month does not belong to the same middle class as the one who earns $ 5,000, and the tax rates for one and the other should be clearly differentiated. However, both can be more supportive of the country and accept a slight increase in taxes. Especially when having this income is in itself a privilege, since less than 20% of employees enjoy a salary of that nature. In addition, all those employees who receive wages above $ 685.71 already receive the benefit of not paying Social Security for all of their income.
With the discourse of protecting the middle class, the FMLN is also seeking greater rapprochement with this sector of the population; approach that can be translated into electoral votes. Along the same lines and with the same end, the left-wing party has defended maintaining the electricity subsidy for consumption between 100 and 200 kilowatt hours per month. A subsidy that compromises state finances and does not serve the poorest population. The FMLN should review whether this policy is consistent with its principles of defending the most disadvantaged.
For its part, Arena, in addition to defending the interests of big capital, its partners, funders, and historical voters, also seeks to bring together the so-called middle class for electoral purposes. Thus, in parallel to the frontal rejection of this tax reform, it has requested the permanent elimination of the gasoline tax, even knowing that this is necessary to balance the country’s finances and that it affects mainly those who can actually pay it. In the same logic, the rest of the parties are analyzing how to obtain electoral revenue before taking a final position on the tax reform.
And this panorama the only thing that causes is sadness. It is sad that the country’s power groups and their political representatives take a position on state finances only based on the electoral revenues they can obtain. Having a vision of the country and seeking the common good over individual interests is something that is totally alien to them. If the State needs more funding, it is everyone’s job to respond to this need. Even more so for those who are in a position to pay more taxes without compromising the satisfaction of their basic needs. When income is higher than the national average, it is an unavoidable duty to pay more taxes.