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Foreign firms clash with Socialists in Geneva

Meritxell Mir/The Local/AFP · 4 Oct 2011, 10:34

Published: 04 Oct 2011 11:59 GMT+02:00
Updated: 04 Oct 2011 10:34 GMT+02:00

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Global corporations have entered the political fray in Geneva as they launch a counter-attack againt the Socialist Party’s plans to jettison tax breaks for the canton's 931 foreign firms.

Multinational companies with offices in the region have reminded politicians that more than half the positions they create are filled by Swiss citizens, newspaper La Tribune de Geneve reports. 

"Why spit in the soup when the soup was rather nice and has served the public authorities well?", said Blaise Matthey, head of the Fédération des Entreprises Romandes (FER), which represents businesses in the French-speaking part of Switzerland.

On September 29th, the Socialist Party of Geneva (PSG) launched a double tax initiative to remove fiscal deals enabling foreign citizens to pay a fixed amount in taxes every year, regardless of their real income or wealth.

The PSG is also asking for the abolition of the tax relief enjoyed by foreign corporations in the canton. The current system sees Swiss firms pay an average of 24.3 percent of their revenue in taxes, whereas foreign ones contribute an average of just 11.6 percent. “This is unfair competition for our economy,” the party said.

The head of the Finance and Housing Department, socialist Sandrine Salerno, also added fuel to the fire. In a column written for the municipal magazine Living in Geneva, Salerno pointed out:

“These firms come to Switzerland to pay less taxes, but also to avoid being subject to European regulations that are more drastic than ours. As a result, Geneva is growing and contributing to a weakening of the global economy.

“Good job,” she added sarcastically.

In a reply to Salerno, Procter & Gamble's director general Frédérique Reeb-Landry told La Tribune de Geneve that half the jobs the company creates every year are taken by Swiss citizens. That figure rises to an average of 60 percent across foreign firms, according to FER. 

However, attracting global firms en masse has had consequences that go beyond tax cuts. Geneva has been at an infrastructural standstill for years, suffering especially from a severe housing shortage. The vacancy rate in September was just 0.25 percent.

A month before the federal elections, some political parties pointed the finger at highly paid foreigners who benefit from attractive tax rates and who have helped to push up property prices in the region.

Story continues below…

Others disagree. The head of the Geneva Chamber of Commerce, François Naef,
told news agency AFP it is “ridiculous” to think that these qualified workers from abroad were at the root of the canton's woes.

According to Naef, the housing shortage was due to a lack of political will, or "overly strict legislation which has blocked construction over the last few years."

Multinationals with their European headquarters in Geneva include Procter & Gamble, Hewlett-Packard, Merck Serono and Caterpillar.

Meritxell Mir/The Local/AFP (news@thelocal.ch)

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Your comments about this article

2011-10-05 04:03:35 by Global Macro
One area in which Switzerland excels is international banking. And the principal reason that they excel is that favorable tax treatment and regulation attracts foreign investment on a very large scale. That has made Switzerland the envy of many others. How does Switzerland’s success “contribute to a weakening of the global economy”? How would abandoning tax relief extended to foreign corporations help Switzerland? Is the objective to drive away foreign corporations? The left wants to pull down and destroy everything. No, European regulations are not “more drastic” than Switzerland. They are profoundly corrupt and decadent. The left will not be pleased until they have dragged Switzerland (and others) down to that level. And, in some respects they are succeeding brilliantly.
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