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Tax hike to bolster disability insurance
Parliament has approved a temporary increase in value added tax and the creation of a separate fund to shore up Switzerland's disability benefit scheme.
The decision to raise VAT by 0.4 per cent from 2010 to 2016 is subject to a nationwide vote. It is expected to result in extra revenue worth SFr1.5 billion ($1.5 billion) annually.
VAT is currently at 7.6 per cent while the disability insurance scheme had run up debts of SFr11 billion by the end of 2007.
Last year voters approved annual spending cuts and a reduction in the number of new beneficiaries.
The House of Representatives followed the Senate on Wednesday in agreeing to grant the disability insurance scheme a SFr5 billion loan. The move is aimed at easing the financial burden on the joint fund of the old age pension scheme.
Three of the four main political parties came out in favour of an increase in VAT, while the rightwing People’s Party denounced the plan as an incentive for foreigners to claim unjustified benefits.
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