Cars to clothes: Why some things in Switzerland will become cheaper in 2024
Given all the price increases set to go into effect in Switzerland in 2024, it is good to know that at least some costs will drop.
It is no secret that Switzerland is comparably more expensive, with "goods and services costing significantly more on average in Switzerland than in neighbouring countries," according to the State Secretariat for Economic Affairs (SECO).
And things will not get any better in 2024.
Between higher health insurance premiums, electricity prices, rents, and public transport costs, Swiss consumers will be squeezed even tighter once the new year rings in.
But some relief is on the way.
What is happening?
From January 1st, 2024, the government will abolish duties on 95 percent of all imports.
While these tariffs are not solely responsible for the high cost of living, they are a contributory factor.
“A number of factors make the country particularly expensive compared with its neighbours,” SECO said. "One is its high wages and costs, which drive up prices. Another, however, is the variety of tariff and non-tariff trade barriers that have the effect of isolating the Swiss market, allowing companies to charge higher prices here than abroad."
Therefore, removing tariffs "will strengthen Switzerland's position as a business and industrial location," the organisation added.
Why is Switzerland so expensive anyway?
As SECO said, high wages drive up the cost of living.
But there are other reasons as well.
Among the most often cited ones are protectionism and lack of competition, which are inter-related, as the former invariably leads to the latter.
Trade protectionism is a policy that protects domestic industries from foreign competition.
This is done mostly to privilege domestic products and economy over imported goods.
However, there are other factors as well.
A study by the University of Applied Sciences of Northwestern Switzerland showed that foreign producers and suppliers impose large price increases in Switzerland, exploiting high salaries and consumers’ purchasing power.
READ ALSO: Why is Switzerland so expensive?
How will the absence of import duties benefit consumers in Switzerland?
Tariff reductions could result in annual savings of around 350 million francs, so “consumers stand to benefit from the measure,” SECO said.
The duty-free status will make many products more affordable (as long as they are imported rather than manufactured in Switzerland).
Among them are:
- Cars
- Clothes
- Footwear
- Personal care products
- Bicycles
Basically, any goods no longer subject to customs duties, regardless of their country of origin, will be cheaper.
What about electronics?
If imported, they too will be cheaper.
However, the price difference may not be as significant as with other products, simply because most electronics already cost less in Switzerland than elsewhere in Europe.
The reason is that, at 7.7 percent, the Value Added Tax (VAT) that is added to prices of all products sold in Switzerland, is much lower than in other countries.
As a comparison, the average standard VAT in the European Union is 21 percent, with some countries exceeding this figure.
From January 1st, 2024, Switzerland’s VAT will increase to 8.1 percent in order to better finance the pension scheme, but even with the hike, the tax will still be twice as low as elsewhere in Europe.
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It is no secret that Switzerland is comparably more expensive, with "goods and services costing significantly more on average in Switzerland than in neighbouring countries," according to the State Secretariat for Economic Affairs (SECO).
And things will not get any better in 2024.
Between higher health insurance premiums, electricity prices, rents, and public transport costs, Swiss consumers will be squeezed even tighter once the new year rings in.
But some relief is on the way.
What is happening?
From January 1st, 2024, the government will abolish duties on 95 percent of all imports.
While these tariffs are not solely responsible for the high cost of living, they are a contributory factor.
“A number of factors make the country particularly expensive compared with its neighbours,” SECO said. "One is its high wages and costs, which drive up prices. Another, however, is the variety of tariff and non-tariff trade barriers that have the effect of isolating the Swiss market, allowing companies to charge higher prices here than abroad."
Therefore, removing tariffs "will strengthen Switzerland's position as a business and industrial location," the organisation added.
Why is Switzerland so expensive anyway?
As SECO said, high wages drive up the cost of living.
But there are other reasons as well.
Among the most often cited ones are protectionism and lack of competition, which are inter-related, as the former invariably leads to the latter.
Trade protectionism is a policy that protects domestic industries from foreign competition.
This is done mostly to privilege domestic products and economy over imported goods.
However, there are other factors as well.
A study by the University of Applied Sciences of Northwestern Switzerland showed that foreign producers and suppliers impose large price increases in Switzerland, exploiting high salaries and consumers’ purchasing power.
READ ALSO: Why is Switzerland so expensive?
How will the absence of import duties benefit consumers in Switzerland?
Tariff reductions could result in annual savings of around 350 million francs, so “consumers stand to benefit from the measure,” SECO said.
The duty-free status will make many products more affordable (as long as they are imported rather than manufactured in Switzerland).
Among them are:
- Cars
- Clothes
- Footwear
- Personal care products
- Bicycles
Basically, any goods no longer subject to customs duties, regardless of their country of origin, will be cheaper.
What about electronics?
If imported, they too will be cheaper.
However, the price difference may not be as significant as with other products, simply because most electronics already cost less in Switzerland than elsewhere in Europe.
The reason is that, at 7.7 percent, the Value Added Tax (VAT) that is added to prices of all products sold in Switzerland, is much lower than in other countries.
As a comparison, the average standard VAT in the European Union is 21 percent, with some countries exceeding this figure.
From January 1st, 2024, Switzerland’s VAT will increase to 8.1 percent in order to better finance the pension scheme, but even with the hike, the tax will still be twice as low as elsewhere in Europe.
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