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Spain approves key measures in the Canarias decree
The Spanish government has given the green light to several of the measures contained in the Canarias decree, a regulation designed to unblock some of the archipelago’s main economic demands and to give fresh momentum to La Palma’s recovery, five years after the eruption of the Tajogaite volcano.
The royal decree-law approved at this Monday’s Council of Ministers brings together four measures that the regional government regards as priorities for the islands, and allows long-standing demands that had been on the table for months to move forward. Some of these actions have a direct impact on La Palma’s recovery, while others seek to ease the extra costs the islands bear as an outermost region and to address some of the archipelago’s most pressing social needs.
60% income tax rebate for La Palma residents
The 60% tax reduction on income tax (IRPF) for residents of the island is extended for the whole period from 2022 to 2026, which may mean paying less in the annual tax return or receiving a larger refund. The measure is intended to keep more money in the pockets of La Palma’s workers and pensioners and to ease the finances of households directly.
€100 million to rebuild La Palma
The state will allocate an extraordinary €100 million from the Canary Islands government’s 2025 budget surplus to continue rebuilding the areas affected by the Tajogaite eruption. The money will make it possible to address some of the wounds that remain open in the primary sector of the Aridane Valley, from repairing roads and rebuilding water pipelines to redesigning the irrigation networks buried by lava. There will also be resources to help restore farms and agricultural facilities, particularly in sectors such as bananas and livestock farming.
More breathing space for farmers’ loans
Farmers in El Paso, Los Llanos de Aridane and Tazacorte will have an extra six months to deal with their bank loans. The mandatory suspension of capital and interest payments is extended until March 2027, meaning that during this period lenders cannot demand repayment of instalments or charge late-payment interest. The aim is to buy time for producers whose holdings, in many cases, have still not regained their productive capacity since the eruption.
Easier access to benefits for the self-employed
Social Security criteria are being amended so that self-employed workers in La Palma can claim the benefit for cessation of activity. The key change is that EU agricultural subsidies, such as those under the POSEI programme, will no longer count as income from the activity, preventing farmers from exceeding the legal income threshold and being denied the financial support.
Around €600 million freed up for public services
In addition to the approved measures, the state will allow the Canary Islands government to use around €600 million accumulated from previous years thanks to the region’s low debt. The authorisation opens the door for that money to stay in the islands and be channelled into strengthening public services and priority policies. Healthcare, public housing, schools and social services are among the possible main destinations, without this spending being blocked by the usual limits of the spending rule. The government is seeking to respond to some of the archipelago’s outstanding needs while at the same time accelerating La Palma’s recovery.
Political criticism of the decree
However, the decree has not been without controversy. Nueva Canarias-Bloque Canarista, PSOE and Vox questioned the regional government’s approach in Parliament and, for different reasons, focused on issues that also depend on the Canary Islands’ own management. The socialists called at the time for the Clavijo government to specify which measures it can drive forward directly from the islands, while Nueva Canarias went so far as to describe the decree as a letter to the Three Kings given the number of requests passed to the state. Vox, for its part, cast doubt on whether the solution to the Canary Islands’ problems always lies in demanding more resources from Madrid.
The Canary Islands government is asking the state for funds while leaving more than €3,000 million unspent so far this parliamentary term, the highest level of budget under-execution in the archipelago’s history.
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