Canton Zug continues to be a magnet for new inhabitants from within Switzerland and abroad, thanks to its recent history of lowering tax rates.This content was published on June 6, 2009 - 10:07
In 2007, foreign newcomers outnumbered Swiss migrating from different cantons for the first time. Now Zug wants to shift its policy to prevent its Swiss population from being overwhelmed by outsiders.
Apartments and houses for middle-income earners have become more expensive than anywhere else in the country, according to Gianni Bomio, general secretary of the canton's economic department.
For Bomio, the super rich, who are attracted to the canton by income and wealth tax breaks, do not cause the problem. Nor does it affect this group of inhabitants "because they can find any accommodation they want", unlike middle-income families.
The unsustainable inflation of house prices for the middle-class is seen as an indirect consequence of more and more companies settling in the canton to take advantage of low corporate tax rates.
Tax not everything
These firms offer many jobs and training opportunities in the canton, but they also place greater demand on the restricted housing market as they bring more employees to the region. According to Bomio, this problem represents "the other side of the coin in a small canton with little living space".
The high cost of land and accommodation is behind the decision by many Swiss families not to live in canton Zug, according to Bomio.
"Many of our neighbouring cantons have also reduced taxes. Therefore, families weigh up the mixed financial implications," said Bomio. "They do not necessarily live in the canton with the very lowest tax rates. But they choose a region where land prices are cheaper and that still offers low tax."
The cantonal parliament is currently debating an initiative to create more affordable housing. "We are trying to give a kind of political tax break," Bomio said. "The principle is to allow all social classes to live in canton Zug."
More highly skilled jobs
Zug city president Dolfi Müller, of the centre-left Social Democrat party, is also pursuing the same goal. He is committed to giving all social classes a decent quality of life in the city, but he is not so concerned about where people come from.
"We are going against the political trend," he said. "We are promoting social housing projects and set aside affordable accommodation in the city. That is not so common in the rest of Switzerland."
At present, the most common newcomers to the canton are highly skilled German workers as opposed to highly wealthy people, according to Bomio. They are attracted to the canton because there are jobs on offer rather than for the tax breaks and they also need accommodation.
"The high-tech industry has developed in canton Zug," he said. "We do not need so many assembly line workers as before – we need industrial specialists."
Foreign boom may end
The super rich individuals who figure so prominently in gossip columns are also still coming to Zug, but Bomio believes the recent phenomenon of foreign newcomers outnumbering Swiss has been fuelled by the increased number of jobs on offer.
However, he believes that the trend is unlikely to continue because recent arrivals have predominantly been from one country (Germany), that can only provide so many migrants, and have been concentrated mainly in the catering and health sectors that can only provide so many jobs.
Both the canton and the city have made efforts to cater for the cultural needs of newcomers as well as their tax expectations. Dolfi Müller believes these efforts not only make people feel more at home, but also help to attract a wide range of people with different income levels.
This goes hand in hand with the city's "strategy against price pressure" he said.
Eveline Kobler, swissinfo.ch (translated from German by Matthew Allen)
Canton Zug by numbers
According to the Tages-Anzeiger newspaper, 2007 was the first time foreigners outstripped Swiss as the most numerous migrants to Canton Zug.
Some 2,854 foreigners came to live in the canton compared with 2,262 Swiss arriving from other cantons.
German nationals made up 1,047 of the foreign legion, making them the biggest national group to be drawn to the canton. Of the rest, 1,339 came from other European countries.
In the same year, 240 Germans left the canton out of 942 people of foreign origin (753 of those from other European countries).
Canton Zug has a population of around 110,000 squeezed into a space of some 230 square kilometres. This makes Zug the third-smallest canton in Switzerland. Its main town is also called Zug.
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