Swiss government steers unexpected tax revenue into air defence

The Swiss government plans to direct one billion francs in unexpectedly high tax revenue to air defence instead of debt reduction, according to an analysis by SRF correspondent Dominik Meier. Defence Minister Martin Pfister has persuaded the Federal Council to make the move, which would give the Defence Department additional funding without requiring spending cuts in subsequent years.

The plan would fund initial payments for defence drones and anti-aircraft systems. The government is seeking parliamentary approval even though Parliament has not yet made a final decision on purchasing the systems.

The move is being justified by military and financial considerations. The arms market is overheated, delivery times are increasing and manufacturers are increasingly demanding advance payments of up to one-third of the purchase price when orders are placed. Making the money available quickly could improve Switzerland’s chances of receiving the systems sooner.

The security situation is another factor. Switzerland currently has no significant air-defence capability, while drone sabotage and long-range attacks using cruise missiles or rockets are considered among the most likely threats.

The Social Democratic Party and the Greens are opposing the plan. They argue that the additional tax revenue should be used for climate protection and development cooperation rather than accompanied by further cuts in those areas. A stable majority of centre-right parties is expected to support the transfer to defence.

The unusual funding arrangement has also prompted centre-right security politicians to consider other ways of financing the army’s planned expansion. The Federal Council wants to raise value-added tax for that purpose, but the proposal appears unlikely to succeed. Lawmakers from the Council of States will discuss alternatives with finance policymakers from Thursday.

One idea already circulating is to automatically channel future surpluses and unexpectedly high tax revenues into a planned defence fund. However, the government has already budgeted for significantly higher tax revenues in the coming years, and there is no guarantee that additional surpluses will materialise. Any such funds would also be unavailable for debt reduction.