“Fair taxes” are unfair for competitiveness

The cabinet has warned the Swiss electorate against voting in favour next month of a tax reform proposal aimed at making the rich pay more.

Finance Minister Hans-Rudolf Merz said that the “fair tax” initiative by the Social Democrats would make Switzerland a less attractive location for doing business as well as reducing tax sovereignty of the cantons.

This, Merz added, would lead to job losses and lower living standards.

Swiss voters will decide on November 28 whether to accept the Social Democrats plan to introduce a minimum tax rate of 22 per cent for people earning more than SFr250,000 ($259,000) annually, and a 0.5 per cent tax on assets above SFr2 million.

According to the political party, cantons and communes would continue to be free to set the tax rates for earnings and assets below these amounts.

Merz’s comments on Wednesday came a day after the Social Democratic Party launched the campaign to win over voters to the plan.

Party president Christian Levrat said the reform would put an end to abuse of the system and end the damaging tax war waged between cantons. At present, cantons compete to attract wealthy tax payers by setting low rates based on the rental value of their property.

He argued that the new tax rates would only affect one per cent of tax payers, or 32,000 people. And according to the Social Democrats, only 9,000 of these are registered in cantons or communes which allocate generous tax breaks.