Voters in canton Bern have rejected a proposal to lower corporate taxes, dealing a surprise blow to the government and parliament trying to give the canton a competitive edge.
Nearly 54% of voters on Sunday came out against a planned lowering of tax rates for companies headquartered in the canton meeting certain criteria. The referendum on the tax breaks was launched by left-wing parties who argued that the planned CHF100 million ($100 million) in annual cuts sent the wrong message following savings measures in areas such as education and social programmes.
Bern, Switzerland’s second-largest canton by population, has among the highest corporate tax rates in Switzerland, at 21.64%. Proponents of the tax cuts had argued they were necessary to keep pace with other cantons offering lower rates and keep jobs from leaving Bern. Lucerne and Nidwalden have the lowest rates in Switzerland at 12.3% and 12.6% respectively, while Geneva has the highest at 24.1%.
Nationwide, Swiss voters in 2017 turned down a package of corporate tax changes called for by the government. Lawmakers released a revised proposal in the spring of this year designed to walk the line between offering low tax rates to companies and criticism over such tax breaks from the international community.
Earlier this year, the consulting firm KPMG predicted that cantons would continue to slash corporate tax rates on their own as part of a race to attract companies. Bern’s vote result on Sunday challenges that trend.