by © Eugenesergeev | Dreamstime.com On 16 November 2022, Switzerland’s federal government announced the sums that will be transferred between the nation’s statelets or cantons in 2023, a mechanism aimed at ensuring wealthy cantons support those with weaker economies. In 2023, CHF 5.6 billion will be transferred, a sum CHF 290 million greater than in 2022 (+5%). The total ...
Topics:
Investec considers the following as important: 3) Swiss Markets and News, 3.) Personal Finance, Editor's Choice, Featured, newsletter, Personal finance, Politics
This could be interesting, too:
Investec writes Swiss health care costs continued to rise in 2022
Investec writes Swiss parliament rejects adding dental care to basic insurance
Vibhu Vikramaditya writes Navigating the Slippery Slope: How Hoover’s Interventions Paved the Way for the Great Depression
Ryan McMaken writes Frédéric Bastiat Was a Radical Opponent of War and Militarism
© Eugenesergeev | Dreamstime.com
On 16 November 2022, Switzerland’s federal government announced the sums that will be transferred between the nation’s statelets or cantons in 2023, a mechanism aimed at ensuring wealthy cantons support those with weaker economies.
In 2023, CHF 5.6 billion will be transferred, a sum CHF 290 million greater than in 2022 (+5%). The total sum is equivalent to less than 1% of Swiss GDP.
Under the national financial equalisation mechanism, six cantons will transfer some of their tax revenue to Switzerland’s 20 other cantons in 2023.
Switzerland’s cantons have very different tax bases, costs and tax rates. Taxes in Switzerland are comprised of federal taxes, cantonal taxes and municipal taxes. Federal taxes are the same across all of Switzerland. However, cantonal and municipal taxes range significantly. Cantonal taxes are typically the most onerous of the three layers of tax.
Before 2008, all of the cantonal taxes raised by a canton were spent there. In 2008, this changed. Now every year rich cantons have to give some of their tax revenue to poorer cantons under a system known as the péréquation financière nationale or Finanzausgleich.
In 2023, a total of CHF 5.6 billion will be paid to 20 cantons. The biggest recipients will be Bern (+1,077 million), Valais (+844), Fribourg (+589), Aargau (+513), Solothurn (+423 million), St. Gallen (+307 million) and Graubunden (+268 million). Only 6 cantons will pay. These include Zurich (-497 million), Zug (-366), Schwytz (-197), Geneva (-172), Basel-City (-118) and Nidwalden (-42 million). Vaud will receive CHF 124 million.
The amounts paid and received are based on the financial resources and costs of each canton. Cantons with strong tax bases and low costs get hit hardest. For example Zug gets hit with a charge of CHF 368 million because of its strong tax base but only gets compensated by CHF 3 million for its cost base. Other cantons like Geneva have both high tax bases and a high cost structure. Geneva claws back CHF 157 million of its CHF 326 million transfer amount because of its costly sociodemographic structure.
Tags: Editor's Choice,Featured,newsletter,Personal finance,Politics