Switzerland Rejects Wealth Tax Initiative

by Ulrika Lomas, Tax-News.com, Brussels

30 November 2010

Swiss voters have rejected a controversial proposal to impose a minimum tax on the Confederation’s wealthiest.

Put forward by the Social Democrat Party (SP) the proposal “For fair taxes” (Pour des impôts équitables), sought to introduce a minimum income tax rate of 22% for single individuals earning more than CHF250,000 (EUR187,000), and to introduce a 0.5% levy on taxable wealth in excess of CHF2m, in a bid to put an end to tax competition between the Swiss cantons, eager to attract wealthy residents.

According to the final results, 58.5% of the electorate voted against the SP’s initiative while 41.5% voted in favour. Although 1.07 million voters expressed their view that tax competition among the Swiss cantons should be limited, 1.51 million voters agreed with the Federal Council and business associations, and opposed the measure.

In its statement on the initiative, the Federal Council confirmed its rejection of the proposal and emphasized that the initiative merely served to call into question the sovereignty of the cantons on tax matters, and with it tax competition, which in turn would have a negative impact on Switzerland as a whole, reducing the attractiveness of Switzerland relative to other countries. In addition, it argued, limiting fiscal competition would lower the incentive for the individual cantons to offer an optimal relationship between cost and benefits, which could lead to an overall rise in taxation. Swiss industry had also warned of tax rises for all, and of an exodus of good taxpayers abroad.

Economiesuisse welcomed the outcome of the initiative, delighted that voters had appreciated the damage that would have been done to Switzerland as a location if the initiative had been adopted. There is a clear commitment to tax competition and to an attractive fiscal environment, and a clear belief in the current model, the statement stressed.

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