Fuel Prices continue to rise in the Canary Islands despite Tax Cuts
Fuel prices across the Canary Islands have continued to rise, despite the Government scrapping the 1% IGIC (Canary Islands General Indirect Tax) previously applied to fuel imports and sales. However, a week on, there has been no noticeable drop in prices at the pump.
According to data from the Comisión Nacional de los Mercados y la Competencia (CNMC), fuel prices have actually increased since the tax cut came into force.
On the day before the change, petrol (95 octane) averaged €1.43 per litre, while diesel stood at €1.56. A week later, those figures had risen to €1.46 and €1.62 respectively.
Although the rate of increase has slowed slightly, the figures suggest the tax reduction has yet to make a meaningful difference for consumers.
Why prices remain high
Fuel prices have been highly volatile in recent weeks, with several sharp increases recorded since the escalation of tensions in the Middle East. Prices peaked in the days leading up to the tax change and again in mid-March.
Since early April, the market has entered a more stable phase, though prices continue to edge upwards.
Unlike mainland Spain, where fuel costs are more heavily influenced by IVA (VAT), the Canary Islands operate with a much lower tax burden. Prior to the recent change, IGIC on fuel stood at just 1%, meaning there was limited room for significant price reductions through tax cuts alone.
In fact, before taxes are applied, fuel in the Canary Islands is often more expensive than in mainland Spain due to transport costs, and even across parts of the EU, highlighting how much taxation affects final prices elsewhere.
Global oil market impact
International oil prices remain the key driver. Ongoing geopolitical tensions, including issues involving the United States, Iran, and the Strait of Hormuz, have pushed up the cost of crude oil.
On 7th April, when the measures were officially published, Brent crude reached €138.21 per barrel, a sharp rise compared to around €60 before the escalation of the conflict.
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