Whether because of its comparatively low tax rates or its famous economic and political stability, Switzerland has been a magnet for super rich people from many lands for decades.
READ ALSO: The Swiss communities where you're more likely to meet a millionaire
In fact, even though obtaining residency rights for mere mortals from outside the EU and EFTA countries (Norway, Iceland, and Liechtenstein) is next to impossible, the (very) rich ones can obtain the so-called ‘golden visa’ and settle in Switzerland for good.
READ ALSO: How wealthy foreigners can 'buy' Swiss residency
However, some are now reportedly considering leaving the country because of a new proposal from a left-wing group.
What is happening?
The Socialist Youth, a wing of the Social Democratic Party, collected enough signatures to launch an initiative calling for a 50-percent inheritance tax to be imposed on those whose assets exceed 50 million francs.
This would be levied by the federal government in addition to cantonal or municipal inheritance taxes.
Under the Socialist Youth's proposal, the proceeds of this windfall would be used for environmental causes and climate control measures.
The date for this issue to be brought to the ballot box is not yet set - more about this below.
What's the reaction to this proposal?
The Federal Council has pointed out this such a tax would drive away a large proportion of the approximately 2,500 Swiss residents who have a fortune of more than 50 million francs.
If introduced, this tax would generate around 100 to 650 million francs annually — not enough, though, to compensate for the loss of 2.8 to 3.7 billion francs in revenue from wealth and income taxes paid by these high-value individuals each year.
In this sense, the initiative is counteractive, the government argued.
It "would make Switzerland less attractive for wealthy individuals — people who already make a significant contribution to the federal, cantonal, and municipal revenues."
Have some already let the country?
According to Michèle Blöchliger, an MP from Nidwalden, the canton where many of the ultra-rich foreigners live, “the first departures have already taken place.”
In Zurich too, some wealthy individuals are “planning to move” out of the country if these measures are implemented, MP Ernst Stocker told the Swiss media.
While left-wingers in the parliament fully support this initiative, MPs from other parties are alarmed about its potential consequences.
“Switzerland clearly needs wealthy people, as more than 50 percent of the tax revenue comes from the super rich,” said Elisabeth Schneider-Schneiter, who represents the Centre Party in the parliament.
“If we drive out individuals with strong fiscal capacity through radical laws, finances will ultimately have to come from the middle class,” she added.
Another MP, Thierry Burkart from the Liberal-Radical party agrees: “This move can inflict considerable damage” on Switzerland, he said.
Will this proposal really become law?
There are quite a few steps to go through first. The Young Socialists collected 109,988 signatures (100,000 are needed for a citizen-driven initiative) and submitted them to the Federal Chancellery for verification in March.
The next step is a parliamentary consultation and recommendation, both of which are likely to last until 2025 or even later.
So any vote would likely not take place before 2026 — and then it would need to gain a majority backing.
So those rich folks who, according to MP Michèle Blöchliger, have already left might have been just a little premature.
Comments (1)