Tax ‘total meltdown’ averted

by
Thomas Stephens
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The price and the VAT on a receipt in Zurich (Keystone) - Click to enlarge

More than 84% of voters have renewed the government’s right to tax its citizens and companies for another 15 years. This is a unique feature of Switzerland’s political system of direct democracy and federalism.

The issue was largely sidelined by the initiative on the public broadcasting licence fee. Yet a serious amount of money was at stake: two-thirds of the government’s tax revenue (including VAT), or CHF43.5 billion ($44.4 billion) in 2016.

Although highly unlikely, rejection would have been a nightmare for the government.

“This would be a total meltdown and I don’t even want to think about it,” said Finance Minister Ueli Maurer in January. “If voters were to say no, the Swiss government wouldn’t have enough funds and there’s no way we could find another source of revenue or introduce spending cuts of the same order.”

On Sunday, a relieved Maurer said the outcome wasn’t a surprise but he was happy by the size of the yes vote, ten percentage points higher than the polls had predicted.

The committee that had campaigned against the vote said it was disappointed with the result despite knowing it was going to lose.

“We had hoped for the same ‘no’ proportion as with the last vote,” said Simon Scherrer, president of the Independence Partyexternal link. In 2004, 26.2% of voters rejected the 15-year extension; this time, only 16% did. Turnout was 54.4%.

Nevertheless, Scherrer believed it was “good for the political system” that alternative scenarios were being discussed, such as the one his party had brought up. He denied the committee had risked a government shutdown, saying it had highlighted several ways the state could function without taxes.

Not everyone agreed. “Largely unnoticed, virtually uncontested and ultimately unopposed, the vote on the federal tax regime was a waste of taxpayers’ money,” Patrick Emmenegger, a political scientist from the University of St Gallen, told swissinfo.ch.

“It did not trigger a debate on how to finance the Swiss state because nobody questioned the necessity of the two taxes. It’s time to get rid of this Swiss speciality.”

Virtually no opposition

The vote was not so much about the financial volume, but the legal justification which was enshrined in the country’s constitution 60 years ago. The system has to be submitted to parliament and voters at regular intervals.

The most recent such ballotexternal link took place in 2004, when 73.8% of voters said yes. As the licence will expire by 2020, voters are called on to renew it for another 15-year term, until the end of 2035.

There had been virtually no opposition to the proposal, and discussions during the parliamentary debate focused on calls by the political right to shorten the term to ten years or to make it an unlimited licence as demanded by the left.

Due to its federalist structure, Switzerland levies taxes at three separate levels: federal, cantonal and local. Beside the federal government, the 26 cantons with their wide-ranging autonomy set their own rates. The 2,250 municipalities can levy taxes either at their own discretion or based on basic cantonal tax scales.