The House of Representatives has approved tax cuts aimed at families, property owners and companies, despite warnings from the finance minister, Kaspar Villiger, that the package was over generous and could lead to a budget deficit.
After a two-day debate, the House of Representatives voted to reduce the burden on the taxpayer by more than SFr2.5 billion ($1.5 billion).
The reductions went beyond the recommendations of a parliamentary committee, as well as those favoured by government, which had proposed a smaller package worth SFr1.7 billion.
The main beneficiaries of the tax cuts are families, property owners, companies and pensioners. The new tax package for families was approved by a large majority despite opposition from the left.
The Social Democratic Party and the Greens were unhappy with the outcome, describing the new tax plan as "a programme for the rich". They regard the measures as unfair because only a minority of well-off couples and families would benefit substantially.
The package has still to be approved by the Senate before it takes effect.
The government was opposed to a larger easing of the tax burden even though it has a balanced budget for the current year.
Villiger has repeatedly warned of a spending spree, saying the federal accounts risked falling back into deficit within the next few years. The federal debt stands at nearly SFr110 billion following years of deficits during the 1990s.
The decision comes ahead of a nationwide vote on the introduction of a capital gains tax, scheduled for December. The Trade Union Federation collected the necessary signatures to force a vote, but both the government and parliament have come out against the proposal.
Taxpayers in Switzerland are taxed directly by the federal authorities, the cantons and municipalities. The rates on a cantonal and local level vary considerably.
Foreign nationals, under certain conditions, are liable to pay a flat-rate federal tax or are subject to taxation at source.
swissinfo with agencies