Budget Focus Shifts to Targeted Tax Relief
The third budget proposal for the current legislative term, presented by Minister of Finance Matilde Asián, will not include a widespread overnight stay tax or a general reduction of the Canary Islands General Indirect Tax (IGIC)—a key 2023 electoral promise from the CC and PP parties. However, in a significant shift, the 2026 budget may introduce targeted tax cuts for student residences and first-time home purchases, following suggestions from the government’s coalition partners, ASG and AHI.
Proposed Tax Break for Student Housing
Melodie Mendoza strongly advocated for the tax reduction on student accommodation, arguing it would “provide relief for hundreds of low-income families who make a considerable effort to support their children’s university studies.” She estimated the measure would save families approximately 30 euros per month, while the government would forgo only about 150,000 euros in revenue. “This isn’t just a tax issue; it’s a matter of social justice,” Mendoza emphasized. “It is fully consistent with the Canary Islands Government’s policy of supporting education and territorial equity.”
Government’s Existing Support and Response
In response, Minister Asián agreed to “study” the proposal but highlighted that the government has already implemented support mechanisms through personal income tax (IRPF) benefits, tailored to a family’s financial capacity. She pointed out that these existing benefits are not limited to students living in dedicated residences but extend to all students who must relocate to another island for their studies. “In this year’s budget,” she defended, “we increased the deduction for relocating to another island from 1,500 to 1,800 euros and raised the deduction base from 39,000 to 45,500 euros to help more families.”
Pushing for Help for First-Time Homebuyers
Parallel to the discussion on education, Raúl Acosta made a case for urgently easing the tax burden on Canary Island residents, particularly young people, trying to purchase their first home. “There can be no further delays in providing relief,” he argued. “A person buying a home valued at 150,000 euros is currently paying around 11,000 euros in taxes, a sum that is unaffordable for many families.”
Current Incentives and the Need for Update
Minister Asián reminded the deputy from El Hierro that a 20% tax bonus already exists for the purchase of a primary residence, applicable when the purchaser’s taxable income does not exceed 24,000 euros. There is also a reduced tax rate of 5% for properties valued under 150,000 euros. However, she acknowledged a critical flaw in the current system, stating that “these thresholds need to be updated, as acquisition values have risen significantly since these rates were first applied.” This admission opens the door for potential revisions in the upcoming budget to better reflect today’s real estate market.
