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Pensions, farming and tax: What issues will the Swiss vote on on Sunday?

On Sunday September 25th, Swiss voters will head to the polls again to weigh in on three issues of national importance. This is what’s at stake.

Pensions, farming and tax: What issues will the Swiss vote on on Sunday?
Farm animals in Switzerland have a good life, the government claims. Image by William Dais from Pixabay

Three issues will be “on the agenda” in the third round of federal referendums scheduled for 2022.

Here’s an overview of what  the Swiss will vote on September 25th:

OASI reform

OASI is a term for the old age and survivors’ insurance which, according to the government, “is the cornerstone of the Swiss social insurance system. It grants pensions of two basic types: old age pensions to people of retirement age [AHV / AVS], and so-called survivors’ pensions to spouses or dependent children of a deceased insured person”.

This reform would provide for a higher value added tax (VAT) — currently at 7.7 percent —  to finance the scheme, and a modification of the federal law on AHV / AVS, particularly in relation to increasing the retirement age for women from the current 64 to 65, same as for men.

This issue is important to anyone working and planning to retire in Switzerland, as without a new influx of funds, the Swiss pension system could plunge into the red within a few years, “because baby boomers are reaching retirement age and life expectancy is rising”, the Federal Council says.

While the government recommends that voters accept this reform, trade unions and left-wing parties are against it, arguing that the new system, especially the higher retirement age, would be “detrimental to women” and low-income people.

READ MORE: Switzerland’s retirees risk losing a whole month’s pension

Industrial farming

Another issue to be decided on at the polls is whether  industrial farming should be banned in Switzerland.

The committee behind this proposal, consisting mainly of animal welfare groups, claims that “many of the animals live out their short lives in large, factory-like fattening operations” — a practice that should be outlawed.

The government, on the other hand, maintains that such farming practices are already banned by the current legislation, and “more and more farm animals live in specially animal-friendly pens and have regular access to the outdoors”.

Amendment to the Federal Act on Withholding Tax

According to the government, Switzerland “levies a withholding tax of 35 percent on income from interest. People living in Switzerland can claim this tax back if they declare the interest in their tax return.  Withholding tax is only due on interest from bonds if the bonds were issued in Switzerland. This is a disadvantage for the Swiss economy, because in order to raise money, many companies issue their bonds in countries where no withholding tax is levied”.

The government goes on to explain that Swiss companies should be encouraged to issue bonds in Switzerland, and the amendment would exempt domestic bonds from withholding tax, making them more attractive for investors and benefit the Swiss economy in the long run.

However the left and trade unions oppose this amendment, arguing that it would favour multinational companies and rich individuals in general.

READ MORE: How Switzerland’s direct democracy system works

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Pension age and factory farming: How did Switzerland vote in Sunday’s referendums?

Swiss voters on Sunday accepted by a hair a divisive pension reform plan, which will raise women's retirement age to the same as men's, but snubbed a push to ban factory farming.

Pension age and factory farming: How did Switzerland vote in Sunday's referendums?

Final results showed a tiny majority of Swiss approved a government plan to reform the country’s pension system for the first time in more than a quarter of a century.

Bern has long argued the need to “stabilise” the country’s old-age security system, under pressure as life expectancy rises and the giant baby boomer generation reaches retirement age.

After failing twice to get the approval needed for similar plans, in 2004 and 2017, two separate votes on different aspects of the reform passed Sunday.

Just 50.57 percent of Swiss agreed to the most controversial part of the reform, involving hiking women’s retirement age by one year.

This means women will need to work until the age of 65 before receiving a full pension, bringing them en par with their male counterparts.

A separate vote on boosting funding for the reform through a sales tax hike meanwhile passed with 55 percent in favour.

Parliament approved the key measures last year, but left-leaning parties and unions decried the reform “on the backs of women” and pushed the issue to a referendum under Switzerland’s direct democratic system.

Backers of the reform argued that it was reasonable for men and women to retire at the same age, with Celine Amaudruz, vice president of the populist rightwing Swiss People’s Party hailing the vote as “a first step towards permanence” for the old-age insurance system.

 ‘Slap in the face’

 But Sunday’s decision sparked outrage from the plan’s opponents.

The Christian Democratic Party’s women’s group immediately announced a demonstration in Bern on Monday, warning the plan would dramatically cut women’s already inferior pension income.

“Women’s pension income will be reduced by 7 billion Swiss francs over the next 10 years: a slap in the face of all women,” it said in
a statement.

Opponents argued that women face significant discrimination and a broad gender pay-gap in Switzerland, and thus receive far smaller pensions than men, demanding such issues be addressed before hiking their retirement age.

In 2020, women in Switzerland on average received pensions nearly 35 percent smaller than men, according to the Swiss economy ministry.Sunday’s results were not immediately broken down by gender, but did show a dramatic divide between different Swiss regions.

While Switzerland’s German-speaking part was overwhelmingly in favour of the reform, the French and Italian-speaking parts were staunchly opposed, with nearly 63 percent of Geneva voters voting “no” and more than 70 percent in Jura canton.

Pierre-Yves Maillard, head of the Swiss Trade Union Federation, warned that the deep divide seen between the sexes and the regions on such an important issue was “not good politics.””It will leave a trace,” he told the Keystone-ATS news agency.

READ MORE: What impact could Switzerland’s referendum on pensions have on you?

Factory farming ban rejected

Another hotly debated issue on Sunday’s ballot, a proposed ban on intensive livestock farming, was meanwhile rejected.

Final results showed just over 63 percent  voted “no” to the popular initiative by animal rights and welfare organisations.

The backers of the initiative had wanted to make protecting the dignity of animals like cattle, chickens or pigs a constitutional requirement.

Their initiative would have imposed stricter minimum requirements for animal-friendly housing and care, access to outdoors and slaughtering
practices, essentially outlawing factory farming.
The government and parliament opposed the initiative, insisting that Switzerland already has among the world’s strictest animal welfare laws, and
that tightening the rules would significantly hike prices.

Backers of the initiative said Sunday they were pleased the campaign had at least raised awareness about the issue.

“All of Switzerland has discussed the problems linked to intensive livestock farming and our meat consumption,” Vera Weber, head of the Franz
Weber Foundation, told RTS. “For us, it is in any case a victory.”

Voter participation Sunday ticked in at over 52 percent, above the usual ceiling of around 50 percent.

Reform of withholding tax turned down

However, the voters didn’t agree with the government’s proposal to scrap of the 35-percent withholding tax on income from financial investments.

Fifty-two percent of voters rejected that plan, even though the government argued this measure would be beneficial in boosting foreign investment.

READ MORE: Pensions, farming and tax: What issues will the Swiss vote on on Sunday?

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