Baume-Schneider defends VAT rise to fund 13th pension

Health Minister Elisabeth Baume-Schneider has defended a proposed increase in value-added tax to help fund Switzerland’s 13th old-age and survivors’ insurance pension. SRF reports that voters will decide on the measure at the end of November.

The increase of 0.4 percentage points would cover part of the cost of the pension, which is estimated at 4.2 billion francs for its first payment. The government says 1.4 billion francs would come from the higher VAT.

Parliament approved raising the standard VAT rate from 8.1 to 8.5 per cent and the special rate for hotels from 3.8 to 4 per cent. The reduced rate for everyday goods, including food and medicines, would remain at 2.6 per cent.

The proposal faces opposition. The FDP launched a campaign against it in late September, arguing that the increase would put a heavy burden on households and small and medium-sized businesses. The party is calling for spending cuts instead.