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Swiss SME Body Slams 'Unconstitutional' IT Initiative

by Ulrika Lomas,, Brussels

03 July 2013

The Swiss Trade Association SGV usam, a business organization representing small- and medium-sized enterprises (SMEs) in Switzerland, has insisted that the people's initiative, calling for a reform of inheritance tax to finance the country's social security and pension fund (AHV), is unconstitutional.

In its legal opinion, the body argues that the initiative incorporates three unrelated political issues into one proposal, thereby violating the constitution. According to the association, the federal constitution stipulates that only politically related matters may be combined within the framework of one initiative.

The inheritance tax initiative calls for the introduction of a new tax in Switzerland. Furthermore, the measure demands that the financing of the AHV fund in Switzerland be reformed. Finally, the proposals attack the taxing rights of the cantons in Switzerland, the SGV explains.

Vehemently opposed to the initiative, the SGV insists that the plans would have devastating consequences for SMEs and for family businesses in Switzerland, if adopted. It warns that many SMEs would face huge problems when transferring a family business from one generation to the next, jeopardizing the very future of some companies.

Spearheaded by the Social Democrats (SP) and the Green Party, the initiative advocates the introduction of a federal inheritance and gift tax of 20 percent, to secure the future financing of the AHV fund. One-third of the taxes collected would flow to the cantons, while the remaining two-thirds would be allocated to the AHV. The cantons are currently able to determine their own taxes. Inheritance and gift taxes yield around CHF1bn (USD1.06bn) for Switzerland's 26 cantons.

To ensure that the fiscal burden on the Confederation's middle class is not increased as a result, the levy would be imposed on inheritances in excess of CHF2m and on gifts of over CHF20,000 annually. Under the proposals, married couples and registered partnerships would be exempt from the tax, while businesses and farmers would be granted tax relief, to preserve both jobs and their future.

Given that the required number of valid signatures was finally collected in March of this year (110,205), a referendum will now take place.

TAGS: inheritance tax | tax | business | tax rates | social security | gift tax | Switzerland | tax breaks

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