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High earners in Switzerland to get tax cut from 2023

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High earners in Switzerland to get tax cut from 2023
Swiss franc notes laid out across a table seen from up close. Image: Pixabay

Switzerland will scrap the ‘solidarity surcharge’ for those in the highest income bracket from 2023.

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People in Switzerland’s richest income bracket will see an effective tax cut from 2023 onwards, after the government decided to abolish the ‘solidarity surcharge’. 

The ‘solidarity’ contribution is charged to people in the highest income bracket in Switzerland to pay for unemployment insurance 

A spokesperson for the State Secretariat for Economic Affairs (SECO) confirmed to Swiss media on Thursday, after the news was leaked earlier in the week. 

This system was introduced in 2011, when the unemployment insurance scheme was in debt and more money was needed to compensate for the deficit. 

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In effect, the surcharge is split between the employer and the employee. 

While the normal deduction amounts to 2.2 percent of wages (1.1 percent paid by the employee and 1.1 percent by the employer), an additional one percent, split between the two, has been deducted from gross wages of above 12,350 francs per month. 

This is the solidarity surcharge. 

These highest earners constitute 10 percent of Switzerland’s workforce. 

Since the payment was implemented, it contributed around 340 million francs annually to Switzerland's budget. 

The reason they will no longer need to shell out the extra money is because unemployment insurance is on track to build up an equity of 2.5 billion by 2023 — a threshold that had to be reached before solidarity contributions could be discontinued.

While the government acknowledged the economic uncertainty due to the war in Ukraine, it was confident the threshold would be reached by 2023 and the solidarity payments would no longer be needed. 

READ MORE: What is the average salary for (almost) every job in Switzerland?

The change will not impact people in other income brackets. 

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