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Switzerland Consults On Energy 'Tax Incentive' Scheme

by Ulrika Lomas, Tax-News.com, Brussels

10 September 2013


The Swiss Federal Council has taken note of a report, examining plans to move from a subsidy-based "encouragement" system, to a tax incentive system, to enable the Confederation to achieve its energy and climate goals at a much lower cost. The Federal Council has tasked the Federal Department of Finance (FDF) with launching a preliminary consultation on the proposals.

Within the framework of its 2050 energy strategy, the Federal Council decided to progressively transfer over to a tax incentive scheme from 2021. Consequently, it tasked the FDF back in September 2012 with drawing up plans for an ecological tax reform, serving as a basis for the future fiscal incentive system.

The FDF puts forward two possible models and firmly concludes that a system based on tax incentives will significantly lower the costs associated with improving energy efficiency, reducing energy consumption, and moving towards renewable sources of energy.

The first model focuses on the development of existing instruments. It provides that the scope of the Confederation's existing carbon dioxide tax should remain the same, with the levy solely imposed on combustibles, and not extended to include fuel. Furthermore, the model recommends the introduction of a tax imposed on the consumption of electricity. Under this variant, taxes would increase very gradually and would remain relatively "modest." Given that the resulting revenues would also be relatively low, Switzerland would have to maintain certain existing or proposed regulatory and subsidy-based measures.

The second model extends the scope of the carbon dioxide tax to include fuel. The model also provides for the introduction of a tax on the consumption of electricity. Under this scheme, tax rates would be higher. Increased revenues arising from this "more efficient incentive instrument" would ultimately allow the Federal Council to reduce other taxes and levies already in force over time.

The initial consultation will run until the end of 2013.

TAGS: Finance | tax | tax incentives | mining | energy | corporation tax | tax rates | carbon tax | Switzerland | tax reform | individual income tax

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