Cities to receive more money under fiscal reform

Finance Minister defended the reform as a balanced compromise. © Keystone/Alessandro Della Valle

Parliament has paved the way for an amendment to a national fiscal system aimed at offsetting differences in revenue between the country’s 26 cantons.

The House of Representatives on Tuesday agreed to grant urban regions, including Zurich, Geneva, Basel and Zug, a reduction in contributions to the common cantonal coffer, while rural and notably mountain regions are set to lose revenue of up to CHF500 million ($500 million) annually.

The other parliamentaryExternal link chamber, the Senate, is expected to approve the reform later this year. 

Supporters of the reform argued that cities, with their growing population, bear a greater financial burden than rural areas, notably spending on welfare, education and healthcare.

The updated so-called fiscal equalisation schemeExternal link is due to come into force in 2020, ending years of wrangling between the different cantons and the federal government.

The scheme, which was introduced in 2008, is seen as a cornerstone of Switzerland’s federalist system, granting the 26 cantons wide-ranging autonomy notably on fiscal matters.

Switzerland levies taxes at three separate levels: federal, cantonal and local. The 26 cantons set their own tax rates while the more than 2,200 municipalities can levy taxes either at their own discretion or based on basic cantonal tax scales.