Swiss voters back controversial overhaul of corporate taxes
Swiss voters on Sunday backed a controversial and complex plan which will see multinationals in the country stripped of a number of tax breaks and an extra 2 billion Swiss francs (€1.77 billion) a year poured into the country's government pension fund.
The reform package was backed by 66.4 percent of Swiss voters in a referendum, according to preliminary results.
The reforms aim to provide solutions to two major problems facing Switzerland – how to prop up the state pension system to cope with an ageing population, and how to ensure Switzerland’s corporate tax regime is in line with OECD and EU fair tax standards while making sure that the country remains an attractive place to do business.
Under the plans backed by voters on Sunday, key tax privileges for companies that mainly operate internationally will be scrapped. All companies will, in principle, be subject to the same taxation rules.
At the same time, in a bid to ensure Switzerland can still attract these firms, there will be new tax incentives for investing in research and development.
The corporate tax reforms involve a complex balancing of cantonal and federal interests. To make up for a corporate tax shortfall estimated at 2 billion francs in the short term, cantons will receive a higher share of direct federal tax revenue (up from 17 percent to 21.2 percent). This will give them elbow room to reduce taxes on company profit and remain competitive.
A boost to the pension system
Meanwhile, the other side of the equation will see an extra 2 billion francs a year poured into state pension funds. This a concession to the political left who have repeatedly argued that Switzerland’s corporate tax structure favours multinationals over average workers.
The extra pension funds will come from the federal government (800 million francs) and from companies as well as employers and employees. Employer and employee pension contributions will be raised by 0.15 percent each, which is 1.50 franc for every 1,000 francs earned.
The two-pronged reforms are the result of lengthy negotiations between parties on the left and right of the Swiss political divide – talks which critics repeatedly slammed as a form of political "horse wrangling" but which supporters held up as an example of Swiss pragmatism at its best.
The strong backing for the plan has been viewed by Swiss media as a ringing endorsement for the Swiss government in general and for finance minister Ueli Maurer in particular.
It also constitutes a major reform breakthrough given that political observers have for some time been speaking of a “reform log jam” in the country.
A previous attempt to overhaul Switzerland's corporate tax system failed spectacularly when voters overwhelming rejected the plans in a 2017 referendum. In the same year, a plan to save pensions was also rejected at the polls.