For years, many people living near one of Switzerland’s borders have been shopping in neighbouring countries to save money.
Even though the Swiss inflation rate is well below that of other nations, prices for many products are still lower in France, Germany, Italy, and Austria compared to Switzerland - especially considering that Swiss salaries are much higher and therefore have a higher purchasing power abroad than at home.
Right now, if you shop abroad, you are allowed to bring back products worth up to 300 francs which, if you shop in France, Germany, Italy, or Austria, amounts to a lot of groceries (certainly more than you would be able to buy in Switzerland for the same money).
If you exceed 300 francs, you must declare your purchases at the border and pay Swiss Value Added Tax (VAT) on the amount over 300 francs.
However, responding to several motions filed to this effect in the parliament, Finance Minister Karin Keller-Sutter wants to cut the tax-free allowance on foreign purchases by half — from 300 to 150 francs.
This proposal, however, is not dissuasive enough for Swiss farmers and retailers, who are now lobbying to lower the tax exemption even further — to 50 francs.
READ ALSO: Why cross-border shopping could become less lucrative for Swiss consumers
‘Competitive advantage’
The Swiss Farmers' Union and the Swiss Retail Federation argue that the current system is unfair.
They say that both the 300-franc and the 150-franc exemption amounts “give competitive advantage to retailers abroad” at the detriment of local businesses, according to Dagmar Jenni, ‘president of the retailers’ group.
‘Exorbitant prices’
For the Foundation for Consumer Protection, the reason that shoppers from Switzerland buy their products abroad is because of 'exorbitant prices'.
"Identical products are, for no reason, much cheaper in neighbouring countries," the group said.
However, as the retailers’ association points out, there is, indeed a reason for price differences.
Costs are significantly higher for Swiss retailers than for their competitors in border regions, Jenni said.
For instance, employees in Swiss shops earn considerably more than their counterparts in Germany, France, Italy, or Austria.
In fact, “if we include travel costs or expenses for gasoline, Swiss retailers are often not more expensive than the ones abroad,” she added.
The Swiss Farmers' Union points out that an average Swiss household devotes only 6.2 percent of its available budget to food.
"Food is therefore cheap compared to salaries,” according to spokesperson Sandra Helfenstein.
What do Swiss consumers say about the effort to stem cross-border shopping?
In a survey on this subject carried out by 20 Minuten news portal, 84 percent of the respondents were not at all happy about the government’s move to make shopping abroad less profitable.
“I am going to shop in Germany just out of spite,” one person wrote.
“I will continue to drive across the border at every opportunity and buy everything I need,” another commentator said.
And yet another pointed out that the government “should hold Migros and Coop accountable" for high prices in Switzerland.
"If they didn’t charge such high prices, then people wouldn’t have to go shopping abroad," they argued.
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