The island tax already had basic food at 0% since 2012, but prices are very similar to the peninsula due to the increase in transportation costs
The VAT reduction on basic foodstuffs that came into effect on January 1 does not affect the whole of Spain, as it is not applied to the Canary Islands, as it has its own tax (IGIC) that has been taxing those same products at 0% for years and the government has not proposed to offset the increase in food prices in the archipelago in any other way.
And that basic needs in this area have increased significantly, in some cases even higher than in the country as a whole, mainly due to the rise in transportation costs. For example, according to the latest data from the INE, food in Spain as a whole has increased by 15.3% for a year, while the increase in the Canary Islands was 15.1%, practically the same. On the other hand, transport costs were 7.7% on the national average, while the increase in the Canary Islands was 9.2%.
From Asedas, the Spanish association of distributors and supermarkets, they explain to this newspaper that the additional costs of transporting goods to the Canary Islands in 2021 amounted to 7,000 million euros (to get an idea of the magnitude, this figure represents about 70% of the autonomous community’s budget). An expense that is “not subsidized” and to which is added an additional cost for the distribution by sea between the various islands that make up the archipelago, specified by the association.
In addition, EU aid to the outermost regions of the Union, including the Canary Islands, Madeira and Martinique, is constantly declining. «The aid from the REA (Special Supply Region) is decreasing year by year. All this logically has an impact on the price of food, regardless of VAT,” they note from Asedas.
Treasury sources confirm that the VAT reduction of the new anti-crisis decree does not affect the Canary Islands, as it has its own consumption tax already at 0% for these foods, as envisaged in Law 4/2012 of June 25, and “It cannot be reduced further”, but they rule out special measures for this area in addition to public transport reductions.
The vice-president of the regional government, Román Rodríguez, clarified a few days ago that lowering food prices in the Canary Islands “is very difficult, because it would mean touching the market, and it will not be easy to to find a loophole”. “The tax measures do not affect us because we have differentiated taxation,” recalled the vice president.
However, the application of the fuel reduction in 2022 took into account the Canary Islands, despite the fact that in the archipelago the IGIC on fuels is also much lower than the VAT applied in the peninsula. The Canary Islands benefited from the subsidy of 20 cents per liter of fuel until December 31, as did the rest of the Spaniards.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
