Vaud’s 2020 budget – higher spending, higher taxes

by
Investec
My articles My booksMy videos
Follow on:Twitter

The Swiss canton of Vaud has managed to balance its 2020 budget with a small surplus of 76,000 francs. This is the 14th time in row that the canton’s budget has been in the black.

Vaud’s parliament building

At the same time planned spending is up by 2.43%, well ahead of Swiss inflation – prices were lower in September 2019 than they were in September 2018. A tax rate rise is planned and some complain the canton’s taxpayers are getting a raw deal.

The canton expects to spend CHF 10.124 billion in 2020 up from CHF 9.884 billion in 2019. Spending increases are planned on education (+2.4%), welfare (+3.0%), the environment (+3.8%) and healthcare (+8.5%), a rise related to the ageing of the population, says the government.

Cantonal revenue in 2020 will rise to CHF 10.124 billion (+3.6%). The rise in revenue is largely due to a planned increase in the tax cantonal rate applied to individuals – the cantonal tax coefficient will rise by 1.5 points. In addition, company tax is expected to bring in an extra CHF 34 million in 2020.

Three quarters of the canton’s budget will be spent on education (30%), welfare (29%) and healthcare (15%). The remainder will go on policing (7%), economic affairs (4%), tax collection and finance (4%), administration (4%), transport (3%), culture (2%) and the environment (1%).

Jean-Hugues Busslinger, a director at Centre Patronal, a company pension provider, thinks the canton’s taxpayers are getting a raw deal. The planned 1.5 point increase in the cantonal tax coefficient to cover increased healthcare spending in 2020 comes on the tail of string of tax increases over recent years. While the residents of some communes will have the cantonal tax rise offset by a cut at the commune level, many won’t argues Busslinger – the rise relates to the provision of home care, a cost that will be borne by the canton rather than by communes from 2020.

Busslinger points to the 7.33% increase in social welfare spending since 2016 and the steep rise in the number of government employees (+8.12% over 5 years) as key drivers of rising spending. Over the same period the population has only grown by 5%, he said. In addition, he laments Vaud’s extraordinarily high wealth tax, one of the highest in Switzerland.