Swiss Think-Tank Laments Tax Reform Inertia

by Ulrika Lomas, Tax-News.com, Brussels

14 December 2011

In its annual 2011 report on reform efforts in Germany, Austria and Switzerland, Avenir Suisse highlights its disappointment as regards the drive for fiscal and financial reform in Switzerland.

The 'Reform Barometer' compares the reform efforts undertaken by the three countries in the key areas of the labour market, social insurance, taxes and finance, and competition and research.

Produced annually by the Cologne Institute for Economic Research (Institut der deutschen Wirtschaft Köln), in collaboration with the Austrian Federal Economic Chamber (Wirtschaftskammer Österreich – WKÖ), and Swiss think-tank Avenir Suisse, the “barometer” project was established in September 2002, and was set at the time at a starting value of 100 for all three countries.

In its follow-up statement on the 2011 edition, Avenir Suisse reveals that the overall reform drive over the reporting period in question, October 2010 to September 2011, increased by 0.9 points in Germany, rose by a mere 0.7 points in Switzerland, and actually declined by 0.1 points in Austria.

Avenir Suisse underscores that the joint assessment of the Confederation’s reform momentum in the area of fiscal and financial policy was “disappointing”, alluding to the fact that above all external factors such as the strength of the Swiss franc had served to either slow down the desire to reform or to steer reform in the wrong direction.

Indeed, according to Avenir Suisse, the partial indicator for financial and tax policy actually worsened for the first time since publications began by 0.7 points, from 133.6 points to 132.9 points.

The think-tank explains that the negative results were undoubtedly due to the “questionable measures” introduced in Switzerland to counter the effects of the strong Swiss franc, and to inconsistencies as regards implementation of the fiscal consolidation programme.

The setbacks were only partially offset by improvements in financial market regulation and in the area of withholding tax, the think-tank maintains, while acknowledging that the requirements of the country’s debt brake rule were nevertheless adhered to.

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