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Swiss government forecasts 2021 deficit but no tax hikes

Summary:
© | Dreamstime.com The coronavirus is set to knock a CHF 1 billion hole in Switzerland’s federal budget for 2021, according to a press release. Without the virus the budget was CHF 2.2 billion in the black. Post virus the budget is now CHF 1 billion in the red. The virus is expected to add ...

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Swiss government forecasts 2021 deficit but no tax hikes

© | Dreamstime.com

The coronavirus is set to knock a CHF 1 billion hole in Switzerland’s federal budget for 2021, according to a press release.

Without the virus the budget was CHF 2.2 billion in the black. Post virus the budget is now CHF 1 billion in the red. The virus is expected to add CHF 2.0 billion to next years spending. The extra money is earmarked for SARS-CoV-2 tests, business loan guarantees and support to the sports sector.

The Federal Council is confident that the extra money borrowed to cover Covid-19 expenditure can be paid back without raising taxes.

Switzerland’s federal spending is constrained by a mechanism known as the debt brake. The mechanism allows some flexibility to account for business cycles. The brake allows a temporary deficit of up to CHF 3.3 billion, however, deficits today reduce the scope for deficits in the future.

The government will make a definitive decision on the budget over the summer and decide on future Covid-19 debt repayments at the end of the year.


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