Swiss politicians debate VAT hikes for pensions, army and rail

Swiss voters will decide on a proposed 0.4-percentage-point increase in value-added tax to fund a 13th state pension payment on Nov. 29, while politicians debate further increases for the army and rail projects, SRF reports.

Parliament is also considering a 0.2-percentage-point VAT rise for the army. For rail infrastructure projects, the proposal is to extend an existing one-per-mille VAT contribution beyond 2030.

Swiss People’s Party MP Lars Guggisberg said VAT had become an “all-purpose answer” for funding political plans. His party opposes the increases and wants the federal budget brought under control through savings, including cuts to international cooperation and asylum funding.

The Centre’s parliamentary group leader, Yvonne Bürgin, said savings alone were not enough to meet spending needs. Her party is the only one backing VAT increases for both the state pension system and the army.

The FDP and Swiss People’s Party oppose VAT rises for any purpose, favouring pension reform or spending cuts. The Social Democrats, Greens and Green Liberals support a VAT increase for pensions but are critical of using it to fund the army.

Social Democratic MP Sarah Wyss said higher defence spending should be funded through other, more socially equitable sources, such as inheritance or wealth taxes. She argued that a VAT increase for the 13th pension payment was fair because everyone would receive it.

FDP co-president Susanne Vincenz called the proposed increase a “tax deception”, arguing that higher everyday costs could reduce the benefit people receive. She said the Nov. 29 vote would show whether voters were willing to bear a greater tax burden if the federal government was not prepared to make savings.

If voters reject the pension-related increase, Parliament may have to consider new taxes or another round of spending cuts.