President points to “tax crisis” with Italy

Swiss President Micheline Calmy-Rey says that negotiations with Italy to resolve a tax spat are still at a delicate stage.

Italy has been particularly critical about Switzerland’s tax practices and traditional banking secrecy. A major sticking point in the spat is a cross-border tax accord.

“We have a crisis in the tax area with Italy,” Calmy-Rey, who is also the foreign minister, said in interviews with the St Galler Tagblatt and the Neue Luzerner Zeitung published on Friday.

Since June 1 talks on cross-border tax in particular had been taking place with Rome but were still “a delicate plant that needed watering from time to time”.

Calmy-Rey did not want to comment on the fact that Italian-speaking Ticino temporarily blocked at the end of June around SFr30 million ($36 million) tax at source revenue belonging to Italian cross-border workers. But she did say that she had warned Italian Prime Minister Silvio Berlusconi that a freeze could happen.

The Swiss government wants to renegotiate a 1974 accord on taxing cross-border workers. At present Ticino pays 38.8 per cent of this tax at source revenue back to Italy. Ticino is calling for 12.5 per cent, as is the case with Austria. Ticino’s block on the tax revenues is a way of putting pressure on Italy.

“Ticino’s decision shows how urgent and important it is for the negotiations to carry on,” said Calmy-Rey, adding that she was sure that this would soon be the case.