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Swiss vote on tax and pensions

The counting of ballot papers is underway across Switzerland Keystone

Swiss voters have gone to the polls to decide on a package of tax breaks and pension reforms.

This content was published on May 16, 2004 - 12:08

The first projections - based on exit polls conducted by the GfS research institute - are expected at 1pm.

The campaign ahead of Sunday's nationwide votes has been dubbed a key political battle between Switzerland’s centre-right parties and the Centre-left.

During their campaigns both sides described the polls as a vote of confidence in the centre-right in parliament and the cabinet.

The two main parties in the centre of the political spectrum were weakened, boosting the rightwing Swiss People’s Party and the centre-left Social Democrats.

Tax breaks

The centre-left Social Democrats and many of the country’s 26 cantons strongly opposed plans for SFr2 billion ($1.5 billion) of annual cuts in federal taxes for families, property owners and shareholders.

They said the rich would mostly benefit from the cuts and argued a drop in federal revenue would force cash-strapped cantons to cut public spending, notably in education and health.

Supporters of the proposals had said the tax breaks would spur economic growth and do away with unfair fiscal advantages for unmarried couples.

Parliament approved the tax package, but the centre-left collected enough signatures to force a nationwide vote.

For the first time in Swiss history, cantons also decided to formally challenge parliament’s plans.

Pension benefits

As part of the reforms of the state old-age pension scheme, women would take retirement at 65 (currently 64) - in line with men’s retirement age.

The legal amendment also includes gradually cutting pension benefits for widows and slowing down inflation-related increases in pensions.

Centre-left groups and the trade unions collected signatures in record time to force a nationwide vote on the issue.

They argued the reforms were aimed at weakening the main tenet of the country’s social security system.

The government, centre-right and rightwing parties as well as the business community said the reforms were necessary to shore up the pension scheme and save some SFr925 million annually.

VAT hike

A third issue at stake was a 1.8 per cent increase in Value Added Tax (VAT) to finance the old-age pension scheme and the heavily indebted invalidity pension fund.

VAT in Switzerland currently is 7.6 per cent – below European Union levels.

The issue was a divisive one not only for the Centre-right and business community but also for centre-left groups and trade unions.

swissinfo with agencies

Key facts

Three issues were put to a nationwide vote this weekend:
A package of federal tax cuts amounting to SFr2 billion for families, property owners and shareholders.
Plans to cut state old-age pension scheme benefits to the tune of SFr925 million per year.
A proposed 1.8 % increase in Value Added Tax by to shore up state insurance schemes for the disabled and for old-age pensioners.

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In brief

Parliament approved the tax breaks, but centre-left groups and many regional authorities opposed to the cuts have called a nationwide vote.

Trades unions and the centre-left Social Democrats have also forced a referendum on parliament’s proposed pension scheme reform.

Latest opinion polls say a clear majority of voters will reject all three proposals.

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