Switzerland Pushes for VAT Increase to Fund Pension Boost
(Bloomberg) — Switzerland’s government said it would favor increasing the country’s value-added tax over raising wage contributions to fund a recently decided increase in pensions.
Given a calculation error in determining the national pension fund’s deficit, an additional 3 billion francs ($3.5 billion) are available in 2033. This means that a boost of VAT is sufficient while deductions from workers’ salaries can be left unchanged, the executive said in a statement on Wednesday. A competing plan had envisioned raising both.
“The 13th pension payment will be made for the first time in 2026,” Interior Minister Elisabeth Baume-Schneider said in Bern. “It must be sustainably financed from the onset. The government’s plan ensures that this will be the case.”
Switzerland’s sales tax is currently at 8.1%, among the lowest in Europe. The government wants to set the final increase in the rate in the autumn, based on updated pension-fund calculations.
Swiss voters will have to sign off on the VAT increase in a referendum. Opponents can also challenge other elements of the government’s plan via a plebiscite.
(Updates with minister in third paragraph, adds map)
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