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Switzerland To Implement Eco-Friendly Tax Reform

by Ulrika Lomas,, Brussels

21 August 2012

Swiss Finance Minister Eveline Widmer-Schlumpf has called for an eco-friendly tax reform, with a 'polluter pays' principle, to take effect from 2020. According to Widmer-Schlumpf, the tax reform must be 'economically neutral'.

The Swiss Finance Ministry is currently elaborating its proposals for this tax reform, before submitting them for consultation in early 2013. However, it is expected to take three to four years before the reforms are finalized, and they would not be implemented before 2020.

On the one hand, polluters would have to pay higher taxes. However on the other hand, firms involved in lowering their carbon emissions could be compensated by a corporate tax cut, while individuals could benefit from a cut in health insurance premiums. The net effect for the public finances should be nil.

This tax reform should be part of the Energy 2050 strategy set out by Switzerland, the main goal of which is the phasing-out of nuclear power. Nonetheless, Widmer-Schlumpf’s stance on the carbon tax has prompted many hostile reactions, with critics saying that it is too early to proceed to further reforms and that the government should wait for existing measures to reduce carbon emissions to show their results.

Swiss Energy Minister Doris Leuthard, on the contrary, says the carbon tax is not a priority and favours the existing policy based on subsidies towards energy efficiency and renewable energy.

However, it is said that Widmer-Schlumpf may justify her confidence in proceeding to environmental tax reform on the grounds that a majority of the members of the Federal Council, the executive body of Switzerland, is favourable to the idea.

TAGS: individuals | environment | Finance | tax | business | energy | environmental tax | carbon tax | Switzerland | tax reform

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