Canary Islands Advocate for Tax Reforms to Enhance Economic Stability

Efforts are underway in the Canary Islands to revise their Economic and Fiscal Regime (REF) to better address economic disparities and foster growth. José Ramón Barrera, the commissioner for the REF, proposes tax cuts for workers and self-employed individuals, alongside targeted benefits for the non-capital islands. These initiatives aim to stimulate business investments in education and knowledge sectors, potentially enhancing the region’s economic landscape.

One significant proposal is to introduce an insularity factor to bridge gaps between capital and non-capital islands. This may involve lowering the IGIC tax rate from 7% in Tenerife and Gran Canaria to as low as 4% on other islands. Additionally, boosting fiscal incentives for businesses could make these areas more attractive, with potential benefits reaching up to 50% compared to mainland Spain, thereby addressing the unique challenges these islands face.

Barrera remains hopeful that a political consensus will enable these proposals to become part of the REF, irrespective of the national political climate post-elections. He warns that without these reforms, the Canary Islands risk further economic divergence from the national average, as current trends indicate a growing concentration in certain sectors and a declining standard of living.