Switzerland – Increase of the VAT rate: Strong Opposition 

The Swiss Federal Council plans to increase the standard VAT rate. The Center Party is a big supporter of this idea. They argue that raising the standard VAT rate is necessary to fund the military. 

Their proposal relies on increasing the standard VAT rate by 0.8% for 10 years, while the reduced and special rates should remain unchanged. Even before the Federal Council and Parliament prepare their proposals for changes to the VAT framework, this agenda has attracted strong opposition from key stakeholders. 

To emphasize the importance of the Swiss democratic electoral system for the approval of relevant tax changes. The government cannot unilaterally approve amendments to tax laws that affect the country without prior approval from the electorate. 

A recent national survey shows that the Swiss population strongly opposes any potential VAT increase to fund the army. Around 75% of the participants responded with a clear no to this measure. 

The Swiss Retail Federation, with 6,200 employees across 2,300 companies, is also a strong opponent of this Government proposal, as the retail sector in Switzerland is facing challenging times, primarily due to the growth of online sales driven by Asian e-commerce giants. 

Whether the Federal Council’s agenda to increase the standard VAT rate will obtain necessary support from other parties and the electorate remains to be seen in the coming months.