Switzerland “could become a feudal state”

Hans Kissling is warning that Switzerland could turn feudal Ursula Meisser

In Switzerland 71 per cent of the wealth is concentrated in the hands of just ten per cent of the population – a figure that economist Hans Kissling finds alarming.

Kissling tells swissinfo that the gap between the rich and everyone else is growing and that this could threaten traditional Swiss democracy and the economy. He makes a call for an inheritance tax for the wealthy.

Statistics show that the 300 richest people have become 40 per cent wealthier in the past eight years, whereas most of the population has a lower income than at the beginning of the 1990s.

Worldwide there is also a trend towards the superrich, according to researchers.

Kissling, a former chief of statistics for canton Zurich, has published a book entitled “Reichtum ohne Leistung. Die Feudaliserung der Schweiz” (Wealth without peformance. The feudalisation of Switzerland).

swissinfo: Switzerland has a reputation worldwide for being a democratic, social and federal state. But you say in your book that it could become a feudal state.

Hans Kissling: This is because the Swiss form of direct democracy [where the population has a say] is very susceptible to influence by the superrich. The problem is that we have the highest density of the superrich here – as many millionaires as in all of Germany.

The superrich are having an increasing influence on votes. We saw this for the first time in 1992 with the vote on joining the European Economic Area (EEA). The millionaire [and rightwing Swiss people’s party leading light] Christoph Blocher invested millions in the campaign against the EEA. The vote was lost and I’m convinced that without the Blocher millions we would today be part of the EEA.

swissinfo: Your ideas have not gone down well with the rich and in bourgeois circles. How have you coped with these criticisms?

H.K.: Despite everything, I think I have had a fair deal. Most of the media have bought into me because I basically take a liberal line. But I keep underlining in my book that I’m actually in favour of efficiency-oriented competition and that I’m not against anyone who becomes very rich through their own economic performance.

swissinfo: You say that the concentration of wealth also threatens the economy. What do you mean by that?

H.K.: If the middle and lower classes believe that the gap between them and the rich is becoming ever greater and that they are the losers in market economy efficiency-oriented competition then this will of course threaten the market economy system directly.

People will start to criticise this system and the result of this is clear – protectionist thinking. You can already see this in the United States, where the middle classes have really lost out. Both presidential candidates are now flirting with protectionist measures and this really threatens the economy.

swissinfo: You call for an inheritance tax for the rich, a measure which has already been rejected by the population in Zurich. Won’t the superrich leave Switzerland if this tax is imposed?

H.K.: [Neighbouring] Germany’s inheritance tax is a maximum 40 per cent and in France, it’s even higher. So there is no danger of people fleeing to these countries.

I call for a tax on very high inheritances, from SFr1 million ($900,000) upwards, and only on the excess value of that. I certainly don’t want people to think that they can’t pass on their family home to the next generation.

I’m only interested in trying to stop any creeping feudalisation, to avoid having huge clans like in South America, which threaten the economy and the political world.

swissinfo: Other Swiss experts have also said that the middle classes are getting poorer and the rich, richer. Worldwide there is a trend towards the superrich. A confirmation of your view?

H.K.: Yes, as I’ve already said, we have the highest concentration of millionaires in Switzerland.

As for the middle classes, I didn’t just compare the richest with the poorest, but also the richest with the middle classes.

I can give you a figure here: the richest one tenth of a percent in Zurich – there are no full Swiss statistics – had 677 times more wealth than an average citizen in 1991. By 2003, 12 years later, the richest one tenth of a percent had 1,027 times more wealth. So the gap has really grown.

The middle classes, unlike the lower classes, have not benefited from any concessions, such as health insurance or childcare allowances. Here they have to use up all their assets before they receive any support. The lower classes have help from the beginning. This is why the middle classes are threatened.

swissinfo-interview: Jean-Michel Berthoud

Millionaires

In 1991 the three richest households in canton Zurich had a taxable income of SFr1.3 billion. In 2003 it was SFr4.5 billion.

According to Bilanz magazine, Russian Viktor Vekselberg, head of Renova, has a gross wealth of SFr14-15 billion. He is the richest inhabitant of the canton.

In 1991 the 100 richest households had a wealth of SFr9 billion, in 2003 this was SFr21.2billion. 27.1% did not pay tax on their wealth.

In the next 30 years, 95,000 people are estimated to inherit SFr1-2 million. 50 lucky ones will inherit more than SFr1 billion.

Inheritance tax for the rich

The economist Hans Kissling, aged 65, was the chief of statistics for canton Zurich from 1992-2006. He has recently written a book theorising that Switzerland could turn feudal.

He writes that in the next few years many people will become rich though inheritance. He is calling for the government to set a tax of at least 50 per cent on inheritances that are more than SFr2 million (or on an inheritance of SFr1 million per heir).

The money should be used on tax breaks for the low and middle income groups as well as for the abolishment of property tax, he says.