Cabinet postpones vote on VAT increase

The government has decided to delay a national vote on an increase in Value Added Tax, which was planned to help the country's ailing disability insurance scheme.

The vote has been put back from May 17 to a provisional date of September 27 as a result of the global financial crisis.

Parliament decided in June last year to raise VAT by 0.4 per cent for seven years in an effort to put the scheme in a healthier financial position but will now have to debate the issue again when it meets in March.

It had wanted to introduce the measure at the beginning of 2010 but there have been calls to delay this for a year or two because of the current economic climate.

Swiss Interior Minister Pascal Couchepin told a news conference in Bern on Wednesday any plan to lower VAT in general to give a boost to the economy had little chance of being accepted.

Couchepin insisted on the need to improve the state of the disability insurance scheme because of its structural deficit of SFr1.5 billion ($1.32 billion. He added that the government was still in favour of the temporary VAT increase.