Asia Presents Cautious Budgets to Parliament Amidst Uncertainty and Declining European Aid
SANTA CRUZ DE TENERIFE, 30 Oct (EUROPA PRESS) –
Today, Wednesday, the Minister of Finance for the Canary Islands Government, Matilde Asián, submitted the draft for the General Budget of the Autonomous Community for 2025 to the president of the regional Parliament, Astrid Pérez. These “prudent” accounts have been developed amidst “a cloud of uncertainty” due to the absence of a precise state budget for yet another year, coupled with a significant reduction in European funds.
The budget for the Autonomous Community for the upcoming financial year totals 11,678 million euros, reflecting an increase of 3.3%, amounting to an additional 376 million euros compared to 2024, with primary allocations directed towards Education, Health, and Social Services. This year, addressing housing as a societal need has also been included among these priorities.
The Minister of Finance stressed that this budget proposal is “rigorous” and aligns with the stability regulations stipulated in the Organic Law of Budgetary Stability and Financial Sustainability. She further emphasised that these accounts maintain measures that secure the sustainability and enhancement of the welfare system, given the prevailing situation of “uncertainty”, which has necessitated a cautious approach in their formulation.
Matilde Asián noted that the budget prioritises social and genuine public expenditure while awaiting Spain’s regulations for 2025, ensuing from the regulatory changes enacted in Europe this year. This situation again defers any policy aimed at tax reductions intended to support businesses and families until there is “greater certainty.”
The minister also mentioned declines in certain budget items due to the 72 million euro reduction in the road agreement annuity and a significant drop of 172 million euros in the Recovery and Resilience Mechanism (MMR) and REACT-EU funds, given that these financial resources will conclude by 2026.
Similar to the previous year, a considerable portion of the expenditure will be allocated to Education, Health, and Social Services. This year, the focus on housing as a societal necessity is also included in this list of priorities. The Canary Health Service will receive an additional 220 million euros, reflecting a growth of 5.04%. The allocation for Education stands at 2,154 million euros, showcasing a 2.93% increase with an additional 61 million euros, while the budget for Social Welfare comprises 762 million euros—an increase of nearly 59 million euros, equating to an 8.37% rise compared to 2024. In terms of housing, the Canary Housing Institute indicates an 11.15% rise, amounting to 172 million euros.
Expenditure on personnel (chapter 1) will see an increase of 236 million euros, predominantly directed towards Health, Education, Justice, and Security. In specific terms, the personnel costs for the Canary Health Service (SCS) will rise by 141 million euros (+6.18%); the Ministry of Education will see an increase of 60 million euros (+3.7%), followed by the Ministry of the Presidency, Public Administrations, Justice, and Security.
For chapter 2 (current expenses of goods and services), an increase of 150 million euros (+8.5%) is anticipated. By sections, the SCS will see a growth of 126 million euros, followed by the Ministry of Social Welfare, which will increase by 27.22 million euros; the Ministry of Education, Vocational Training, and Sports will grow by 5 million euros (3.2%).
Chapter 4 (current transfers) will experience a decrease of 85.28 million euros, as certain items previously included in this category have been reassigned to current expenses related to goods and services. Meanwhile, the Canary Islands Municipal Financing Fund will increase by 8.12%, and funding for the Capital Law will grow by 6.5%.
Real investments (chapter 6) will be augmented by 44 million euros, with the most notable investment increases occurring in the SCS, the Canary Housing Institute (+31.6 million euros), and the Ministry of Ecological Transition, which will experience an increase of slightly over 20 million euros.
In light of consolidated territorial capital expenditure, islands such as Lanzarote and Fuerteventura will see enhancements, while areas like La Gomera will face reductions to equalise the allocations received by all.
TAX REDUCTIONS
Regarding fiscal policy, the 2025 budget includes cuts to personal income tax through the establishment of overall enhancements in deductions, increasing the amounts and the taxpayers eligible for benefits. The deduction for price increases has been eliminated, and this void will be offset by tax saving measures, such as raising personal and family allowances and deflating regional rates across all sections.
The Government of the Canary Islands’ commitment to ensuring its citizens’ access to housing will be demonstrated through improved deductions for purchasing or renting properties. “Access to housing is a right enshrined in our Constitution. The deductions will apply to both the purchase and rental of properties, as well as investments made in renovations to bring a property to the rental market. In all circumstances, we refer to usual housing,” clarified Asián.
Additionally, there will be innovations in the taxation of fuels and petroleum products, as the amounts to be reimbursed to farmers and transporters will be based on actual fuel consumption, and these will also be made compatible with the bonuses in non-capital islands. Moreover, a special regime for industrial diesel will be introduced to improve the application of the reduced rate for this fuel.
