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VAT reform


Energy tax set for clear defeat at ballot box







Non-renewable energy resources, including petrol, provide the bulk of Switzerland's power (Keystone)

Non-renewable energy resources, including petrol, provide the bulk of Switzerland's power

(Keystone)

A controversial proposal to replace value-added tax (VAT) with a tax on non-renewable energy stands virtually no chance of winning a majority in a nationwide vote on March 8. A first opinion poll has found very limited support among citizens.

Seven weeks ahead of the ballot, only 29% of respondents said they would approve the initiative by the centre Liberal Green Party. “A no is certain and the proposal has plainly and simply failed,” says political scientist Claude Longchamp, head of the leading GfS Bern research and polling institute.

With 55% of respondents rejecting the proposal, Longchamp says the low support is disastrous for the campaigners. 

Presenting the findings of the first of two opinion polls commissioned by the Swiss Broadcasting Corporation (SBC), Longchamp says the proponents can’t even count on united support from the political left and ecologists.

Launching their campaign earlier this month, even the head of the Liberal Greens said they would consider it a success to win 30% of the vote in the March ballot.

Longchamp says there is scepticism among respondents about the proposed radical overhaul of the tax system as it is considered risky.

Experts say revenue for the state would drop if energy consumption is reduced. As a result fuel prices would have to be increased to make up for the shortfall.

Drop in revenue

The government, as well as parliament, have recommended a no vote.

Finance Minister Eveline Widmer-Schlumpf said the proposed tax reform could seriously undermine the economy and the state. “VAT has been a crucial source of revenue for the federal authorities,” she told journalists.

Widmer-Schlumpf said the government was considering a tax reform of its own. It would include elements of the Liberal Green initiative but would proceed gradually, instead of forcing through changes within five years.

The initiative wants to scrap VAT, which was introduced in 1995 and has been adapted several times over the years. It currently stands at 8%, with reduced rates of 2.5% and 3.8% for food products and the tourist sector respectively.

Instead, the proponents of the reform want to tax non-renewable energy – fuel, coal, gas or nuclear energy – in a bid to encourage energy saving and boost renewable resources, including wind and solar energy as well as geothermal heat.

Tax deductible child allowance

A separate proposal to exempt child allowances and education benefits from taxable income is more likely to win a majority on March 8.

SBC poll

The pollsters interviewed 1,208 Swiss citizens from all language regions across the country for the first of two nationwide surveys ahead of the March 8 vote.

Swiss expatriates were not included in the poll.

The telephone interviews took place between January 19-24. The margin of error is 2.9%.

The survey was commissioned by the Swiss Broadcasting Corporation, swissinfo.ch’s parent company, and carried out by the leading GfS Bern research and polling institute.

The initiative by the centre Christian Democratic Party has a 19% lead over opponents, with 15% of respondents in the GfS Bern poll still undecided. (For details see graphic.) The proposal enjoys considerable support among the grassroots of both the political left and right.

Voters with families and high-skill professional backgrounds tend to support the initiative, according to political scientist Martina Imfeld from GfS Bern. 

“The next few weeks will show whether support for the initiative remains stable. But it is unlikely to win additional backing,” she says. “It is widely acknowledged that it is time to ease the financial burden of families.”

Who benefits?

The Christian Democrats argue that about a million families would directly benefit from the tax reform.

However, opponents, including the government, parliament and the 26 cantons, have come out against it. They said the tax breaks were unfair as affluent households stood to benefit most and the state would lose revenue of up to CHF1 billion ($1.1 billion) annually.

In November 2013, voters rejected a proposal by the conservative right Swiss People’s Party to grant tax breaks to families who don’t use childcare facilities.

Vote March 8, 2015

Two separate fiscal issues, spearheaded by two centrist political parties, are at stake.

A proposal by the Christian Democratic Party to exempt child allowances and education benefits tax deductible.

An initiative by the Liberal Green Party to replace value-added tax by an energy tax.

It is the first of two nationwide votes this year.

swissinfo.ch



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