What’s the controversy around planned tax breaks for childcare?

The costs for daycare in Switzerland are considerable and it's one of the factors discouraging notably women from returning to work after baby break. Keystone/Laurent Gillieron

Last year parliament signed off on measures to alleviate the tax burden on parents. However, opponents have criticised the decision, arguing that well-off families will be given an unfair advantage.

This content was published on August 3, 2020 - 11:00
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The tax reform is part of a package of nationwide votes on September 27.

What is at stake?

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The reform has two main points: The tax-deductible sum for childcare in creches and by other third parties is to be increased to a maximum CHF25,000 ($26,500) from currently CHF10,000 annually.

In addition, all families are to benefit from a general tax break of up to CHF10,000 from CH6,500 annually per child.

It is estimated the measures will lead to a drop in revenue for the national government to the tune of about CHF380 million on average every year. But the government hopes the reform will help create up to 2,500 fulltime jobs over the next few years.

What are the main arguments for and against?

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Opponents argue that only high-income families will benefit from the proposed tax breaks. This is because more than 40% of Swiss families do not pay so called federal taxes. But under the three-tier tax system, the 26 cantons and their municipalities have wide-ranging autonomy and set their own rates.

There are also concerns that the expected drop in revenue will lead to pressure on the government to introduce spending cuts.

Supporters of the reform say it is necessary to reduce the fiscal burden for families in the face of rising costs of living and to encourage both parents - mainly women - to seek gainful employment to help tackle a shortage of skilled labour.

The controversies in the parliamentary debates revolved around the range of tax reductions and the definition of the beneficiaries.

Why do voters have a say?

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Parliament approved the amended law last year, following several rounds of discussions about a government plan launched in 2011 to address a shortage of skilled labour in Switzerland.

But opponents have challenged the legal reform to a referendum as part of the Swiss system of direct democracy.

They collected the necessary signatures (at least 50,000 to be gathered within 100 days) for a final decision at the ballot box.

Who is for and who is against?

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The political parties on the left – the Social Democrats, the Green Party – as well as the centre-left Liberal Greens want to strike down the reform. The other main parties have come out in favour. The business community is divided while the trade unions have recommended rejection of the reform.

The government has followed the majority in parliament and recommends approval of the reform despite concerns by the finance ministry about less tax revenue.

What is the political and social context?

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Tax breaks for childcare are part of an ongoing debate over measures to improve the life-work balance for families in Switzerland, making it easier for fathers and mothers to take up paid work.

The government also hopes to address the lack of skilled labour.

Previous votes on tax breaks for child benefits and childcare led by centre-right and right-wing parties were clearly rejected by voters over the past decade.

Both the Christian Democrats and the Swiss People’s Party had launched separate proposals for constitutional amendments, but their initiatives failed to win the support of voters.

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