Government wants balanced budget and moderate tax reform

The Swiss government says that balancing the budget and moderate tax reform aimed at attracting foreign investments should be among the key priorities of Switzerland’s financial policy in the coming years.

The Swiss government says that balancing the budget and moderate tax reform aimed at attracting foreign investments should be among the key priorities of Switzerland’s financial policy in the coming years.

Presenting the government’s financial policy outline Monday, Finance Minister Kaspar Villiger said the main targets should be to keep a firm grip on government spending, maintain social cohesion and boost economic growth, employment and prosperity.

Villiger said that cutting federal spending and working toward a balanced budget must remain prime objectives for the country.

“We must ensure that the next generation’s political and economic freedom will not be paralysed by a huge debt burden,” the minister said.

Economic experts predict a federal budget deficit of SFr1.7 billion ($1.1 billion) next year. This is SFr800 million ($533 million) less than allowed under the 2001 deficit cap.

Switzerland should continue to pursue a tax policy that maintains the country’s position as one of the most investment friendly nations of the 29-member Organisation For Economic Cooperation and Development, the government said.

It hopes to ease the burden on taxpayers by maintaining strict spending curbs, a pro-business tax policy and continued economic growth.

The Swiss economy has been steadily gaining ground this year and experts predict that GDP growth will reach 1.6 percent in the four quarter of this year.

Villiger also made clear that the cabinet does not want to introduce a general capital gains tax – as proposed by left-of-centre groups and parties — but that similar forms of taxation may be considered.

The government admits that tax payers are unlikely to see a reduction in payments anytime soon.

The government said this was not least due to the fact that federal pension fund spending would increase because of the increasing number of elderly people.

The possibility of Switzerland joining the European Union – even though that is unlikely to happen in the near future — might also necessitate the government to set aside significant funds, Villiger said.

The government is also proposing to move toward tax reforms that would ease the tax burden on those consumers and industries that use renewable and environment-friendly energy resources. And there are proposals to put more emphasis on consumer taxes.

From staff and wire reports.