Switzerland slams back Tax Initiative

As part of a recent referendum, Swiss voters rejected the contentious idea to put a nominal amount tax on the Confederations richest individuals. It is a development will make many happy, especially those who wish to preserve Switzerlands attractiveness as a wealth management hub along with the many jobs in Switzerland that rely on that.

It was created by the Social Democrat Party (SP) as part of their "For fair taxes" initiative. It sought to introduce a baseline income tax rate at twenty two percent for single individuals earning over CHF250, 000 (EUR187, 000), and to create a 0. 5% tax on taxable wealth over CHF2m, in a bid to finish tax competition between the various cantons of Switzerland, who are all eager to be able to attract wealthy residents. Based on the final results, just slightly less than sixty percent of the voters turned down this specific initiative. Although 1.07 million voters put forward their view that tax competition among the Swiss cantons should be limited, 1.51 million voters agreed with the Swiss government and rejected this potential piece of legislation.

The Federal Council released a statement which confirmed its rejection of the initiative and emphasized that the proposal merely served to help call into question the sovereignty on the cantons on all tax issues, and with it taxes competition, which in turn might have a negative impact on Switzerland. Particularly with regards to it s international competitiveness upon on which the majority of future job creation and recruitment activity depends. In addition, they argued, limiting fiscal competition will lower the incentive for each individual canton to offer an effective relationship between cost and benefits, which potentially could result in tax rises. Swiss industry had in addition warned of tax rises for anyone, and of an exodus of good taxpayers to other low tax jurisdictions.

Industry body, Economiesuisse welcomed the results of the referendum, delighted that voters understood the damage that may have been done to Switzerland if the initiative were being adopted. There is a definite commitment to tax competition in order to an attractive fiscal setting, and a clear belief within the current model, they asserted.