Von Maximilian Brandtner
According to the latest report, are foreigners and emigrants therefore a growing problem from the Canary Islands‘ perspective? They are also the cause of the housing shortage, though this is partly because many people are reluctant to let out properties on a long-term basis due to the poor protection of property rights (squatters). Foreigners are therefore portrayed as a problem and are increasingly being restricted by local politicians in the Canary Islands (which is also a legal issue, despite the EU and the Schengen Area).
Perhaps it is time to change our perspective. Foreigners and emigrants as an opportunity. Yes, the Canary Islands are beautiful. Europe and the world in general are becoming more uncertain. On the periphery, with its mild climate, one might be better able to weather the harsh winds or even a nuclear winter.
Instead of continuing to subsidise the mass market – thereby creating low-wage jobs that do not allow staff to afford current rents – perhaps it is time to introduce positive incentives. At least where it is worthwhile.
Tax incentives in the Canary Islands for private individuals too?
There are plenty of proposals. Twelve possible points have already been published here, but compared to what I am proposing today, those were minor details. After all, the Canary Islands are also a special economic zone for businesses. This applies to petrol prices, as well as to industrial estates on some islands, where there are substantial tax incentives for companies setting up there. So far, so good.
How about creating special economic zones and tax incentives not only for businesses, but also to attract capital and individuals?
This would enable capital to be attracted to the Canary Islands
At present, a wealth tax is levied on those settling in the Canary Islands. This means that only those who do not have a great deal of wealth choose to settle there. Those with a lot of money then go to Malta, Cyprus, Switzerland, Italy or straight to the Bahamas. Instead of deterring wealthy prospective residents with rhetoric and laws bordering on hostility – laws that do not protect property but instead turn it into fair game for squatters – it would be far wiser to invite those who can bring something to the Canary Islands to settle there. Namely, added value in the form of tax revenue from the wealth they possess – whether they invest it in the Canary Islands or have invested it profitably worldwide, but perhaps wish to pay tax on the investment income in the Canary Islands. Provided, of course, that the conditions are right.
Many wealthy friends of the Canary Islands whom I have got to know over the years would love to make the Canary Islands their permanent home. But at the moment, there are so many better alternatives.
Returning to the subject of wealth tax: of the 38 OECD countries, only Colombia, Norway, Switzerland and Spain still have a wealth tax. What about inheritance tax, gift tax and tax on capital gains?
The Canary Islands would be well advised not to rely on ever-increasing and ever-cheaper tourism, as they have done in recent years and decades (yes, the airport expansion is proof of this), but instead to focus on the luxury segment in both tourism and residential development.
To put it bluntly: what is the point of thousands of motorhomes sitting around in the countryside day in, day out for free, perhaps bringing a little extra turnover to the supermarkets? What is the point of all those holiday let properties – which, without a tenancy agreement, without tax and without legal protection, tie up thousands of flats that are withdrawn from the rental market, but which (can) undercut the prices of official tenancy-agreement flats?
Internet platforms are only too happy to play along. They couldn’t care less about the legal status. It is the owner who is liable, not the platform. And finally: what difference do all those dropouts and pensioners make, who are eking out a sunny existence on a meagre income (yes, pensions in many countries are, unfortunately, far too low to live on)?
A call to abolish various taxes
It would be lovely if they were to carry on doing so. But what if, instead, self-employed professionals such as architects, advertisers, tax advisers, writers or lawyers were to move to the Canary Islands permanently, either during or after their active working lives, and invest the fruits of their self-employment in a climate that is just as tax-friendly as the eternal Canarian spring is for body and soul?
What if the successful family business owners who have sold their companies were to move to the Canary Islands with their wealth and pay tax there – without taking jobs away from anyone? But for that to happen – and on a much larger scale than is currently the case in isolated instances – the Canary Islands would have to become competitive with other tax havens in Europe and around the world.
So: Abolish the wealth tax! Abolish inheritance and gift tax (at least for children and spouses). Capital gains tax should be slightly lower than in the Nordic countries of origin.
The job practically takes care of itself, dear Government. The additional revenue – and, above all, investment in high-quality homes, cars, art and services – is skyrocketing.
Who, if not the most beautiful islands in the Atlantic, with the legal certainty, shared currency and cultural affinity of the European Union, would have a better chance of emerging as the winner here?
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