FDP warns VAT rise could hit households and businesses

Switzerland’s FDP has launched a campaign against a planned value-added tax increase to fund a 13th payment from the AHV state pension scheme, warning it could raise costs for households and businesses, SRF reports.

Parliament has approved a 0.4 percentage-point increase in the standard VAT rate, to 8.5 percent. Voters will decide on the measure on November 29. The FDP said it does not oppose the 13th pension payment itself, but rejects the proposed funding method.

The party said the tax increase would further strain household budgets already facing rising health insurance premiums, rents and living costs. It estimated that the combined additional costs could amount to several hundred or even several thousand francs a year. The proposal would take about 1.5 billion francs from the public, the FDP said, yet cover less than half of the pension’s cost. Susanne Vincenz-Stauffacher, co-president of the FDP Women and a member of parliament for St Gallen, called the proposal poorly drafted.

The FDP also cited a study by BAK Economics estimating that the increase could cause nearly 3.6 billion francs in lost economic growth over 10 years. Small and medium-sized businesses, retailers and restaurants would be among the hardest hit, the party said. Lower consumer spending could reduce sales and investment, said Daniela Schneeberger, a member of parliament for Basel-Landschaft.

The party also warned that higher VAT could increase shopping abroad. It said consumers spent more than 9 billion francs outside Switzerland last year.

Swiss farmers could also bear the additional costs directly, the FDP said. Many farms do not charge VAT because of special rules and therefore cannot recover the higher costs through input tax deductions.