The President of the Canary Islands, Fernando Clavijo, has stated that the regional government will not proceed with a reduction of IGIC (Canarian equivalent to VAT) due to the current climate of global volatility and uncertainty.
Speaking in the Canary Islands Parliament on Tuesday, Clavijo urged caution, citing the unpredictable impact that international decisions, particularly those of U.S. President Donald Trump and the European Union, could have on the islands' economy.
Responding to a question from Vox MP Nicasio Galván, who pressed the government to fulfil its electoral promise of lowering the rate of IGIC, Clavijo defended his position by accusing the deputy of "wielding Milei's chainsaw" in reference to Argentina’s libertarian president, implying that Galván was advocating indiscriminate cuts to public services.
Clavijo acknowledged that a reduction in IGIC rates had been included in the government’s election manifesto, but argued that the current economic landscape required a more measured approach. He emphasised that the purpose of his administration was not to impose cuts, but to provide essential public services, foster economic growth, and ensure social prosperity.
He also pointed out that while there have been some reductions in IGIC rates for specific goods, increases have also been applied to others. He defended this selective approach, noting that taxation is a tool for redistributing wealth and discouraging unhealthy consumption habits, such as alcohol, tobacco, and sugary drinks.
Clavijo further highlighted the difficulties in implementing a more assertive public finance policy due to the lack of definitive revenue data from Spain's central government. He also warned of the looming economic risks facing Europe, particularly the possibility of a recession within two quarters if trade tariffs continue to rise.
IGIC is the Canary Islands’ version of VAT and has a general rate of 7%. However, there are different rates depending on the type of product from 0% for essential goods and services, 3% for products derived from the textile or chemical industries supplies, to 13.5% alcoholic beverages, perfumes, jewellery and certain brands of tobacco.
It is a cornerstone of the region’s fiscal autonomy and any changes to its rates remain a sensitive and highly debated issue, especially in times of global economic uncertainty.
