Swiss Government Accepts Conclusions Of OECD Economic Report

by Ulrika Lomas, Tax-News.com, Brussels

12 January 2006

The Swiss government appears to have accepted the conclusions of a report by the Organisation for Economic Cooperation and Development, which has called for the pace of economic and fiscal reform to be accelerated, although one official has indicated that the reforms cannot be achieved overnight and must first be accepted by parliament and Swiss voters.

The OECD's Economic Survey of Switzerland 2006, published last week, called for more transparency to be achieved in the fiscal policy framework by disentangling the finances of the Confederation, of the cantons (which can set their own tax rates) and of the social insurance system.

To help foster a competition culture, the OECD urged the Swiss government to forge ahead with its proposed package of measures which includes a revision of the Domestic Market Act, eliminating regional and local obstacles to a unified domestic market, as well as reforms of the electricity and agricultural sectors.

However, the OECD's report recommended that the Swiss government take these reforms further still by liberalising the telecommunications sector and by reducing technical barriers to imports through the acceptance of products conforming to EU standards (the “Cassis de Dijon” principle).

The OECD also noted that Switzerland's innovation performance needs to be maintained at its current high level by strengthening competition, simplifying administrative burdens, reforming the bankruptcy law and enhancing the efficiency of the university system.

In an interview with Swissinfo, Jean-Daniel Gerber, head of the State Secretariat for Economic Affairs indicated that the government is in broad agreement with the conclusions of the report, but added that such extensive reforms will take much time, effort and persuasion to see through.

"The report is not designed to show how nice Switzerland is but to point out where Switzerland's weaknesses are," Gerber observed. "As such it does not talk about the positive aspects such as our stable currency, excellent labour resources, low inflation and excellent transportation links."

However, he went on to add that: "Apart from some very minor exceptions, I agree with the conclusions 110 per cent. The question is whether it is possible to implement them."

"Switzerland is as much a market economy as a market democracy. The government has not only to convince parliament of its reform intentions but also its citizens, who vote for or against reforms," Gerber stated.

"In general, Switzerland moves two steps forward and one step backwards, but the direction is clear and set," he added.

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