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Swiss SME Body Exposes Tax Implications Of 1:12 Initiative

by Ulrika Lomas,, Brussels

31 July 2013

The Swiss Trade Association SGV usam, a business organization representing small- and medium-sized enterprises (SMEs) in Switzerland, has warned against the adoption of the 1:12 Initiative for Fair Play, insisting that the proposal will result in a revenue shortfall of at least CHF188m (USD203m) for the Swiss canton of Zurich alone.

Put forward by Switzerland's Young Socialists, the 1:12 initiative aims to restrict executive remuneration, thereby reducing social inequality in Switzerland. The proposal stipulates that the salary of a company's highest paid member of staff must not exceed 12 times that of its lowest paid worker. The objective is to ensure that no employee is able to earn more in a month than the lowest-paid employee receives over the course of an entire year.

According to SGV usam, the Zurich Government recently stressed that the measure will lead to a minimum revenue shortfall of CHF188m, at cantonal and communal tax level. Losses incurred at direct federal level will further impact on revenue levels, depriving the local authority of up to CHF260m, the cantonal Government pointed out.

The Zurich Government made clear that the proposal will seriously affect the attractiveness of Switzerland as a business location, and negatively impact on both the quality of life of individuals and prosperity in Zurich. The Young Socialist group's claim that the measure will raise minimum wage levels is simply unrealistic, the Government said, maintaining that in contrast low-paid jobs will merely be relocated or made temporary rather than permanent.

The Young Socialists have succeeded in gaining the necessary 100,000 signatures, to trigger a referendum. Switzerland's lower and upper houses of parliament have both recommended that the initiative be rejected. Business associations in Switzerland are campaigning vigorously for the proposal to be blocked.

TAGS: individuals | tax | business | Switzerland

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