Confederation against abolition of expenditure-based taxation
Bern, 06.10.2014 - The Federal Council is rejecting the popular initiative entitled «Stop the tax privileges for millionaires (abolition of lump-sum taxation)». Today, Federal Councillor Eveline Widmer-Schlumpf explained the reasons for the rejection. The initiative diminishes Switzerland's appeal as a location and restricts the cantons' financial autonomy.
The popular initiative "Stop the tax privileges for millionaires (abolition of lump-sum taxation)" is calling for the abolition of expenditure-based taxation (lump-sum taxation). In the future, foreigners living in Switzerland who are not engaged in gainful activity should be taxed on the basis of their income and assets like all other taxpayers and no longer on a lump-sum basis according to their cost of living.
Expenditure-based taxation enhances appeal as a location
There is fierce international tax competition for wealthy and highly mobile people. Various states use special arrangements to persuade these people to relocate there. The option of expenditure-based taxation allows Switzerland to strengthen its position in international tax competition. The Federal Council therefore sees expenditure-based taxation as an important location policy instrument of economic significance that should be maintained.
Major economic significance for some cantons and communes
Expenditure-based taxation has a long tradition mainly in western Switzerland. 76% of all taxpayers with expenditure-based taxation live in four cantons (Vaud, Valais, Geneva, Ticino). Abolishing expenditure-based taxation would therefore affect these cantons and their communes in particular. If people who were previously subject to expenditure-based taxation moved away, it could primarily create problems for communes in structurally disadvantaged regions and it would thus be difficult to make up for job losses and tax losses. The Federal Council believes that the decision on providing for expenditure-based taxation should continue to be left to the cantons.
Future tightening of expenditure-based taxation
The Federal Council is aware that expenditure-based taxation is caught between locational appeal and tax equity. The revision of expenditure-based taxation aimed to reach a well-balanced compromise between tax equity and locational appeal which should not be called into question again. The revision was adopted by the Federal Assembly in autumn 2012 and will come into force on 1 January 2016.
Address for enquiries
Brigitte Hauser-Süess, Head of FDF Communications,
Tel. +41 58 462 63 01, brigitte.hauser-sueess@gs-efd.admin.ch
Links
Publisher
The Federal Council
https://www.admin.ch/gov/en/start.html
Federal Department of Finance
https://www.efd.admin.ch/efd/en/home.html
Federal Department of Finance
https://www.efd.admin.ch/efd/en/home.html
