Swiss voters face VAT rise to fund 13th pension

Swiss voters will decide on November 29 whether to raise the standard value-added tax rate by 0.4 percentage points to help pay for a 13th annual state pension payment, SRF reports.

Federal Councillor Elisabeth Baume-Schneider, who is leading the government campaign for approval, said the increase was needed to carry out the public vote in March 2024 in favour of the extra pension. The scheme needs more than 4 billion francs in additional funding from this year, with requirements expected to grow, she said.

Baume-Schneider described the tax increase as broadly supported and socially fair. The reduced rate, which applies to essentials including food and medicines and stands at 2.6 per cent, would not rise. She warned that rejecting the proposal could leave the state pension scheme with annual deficits of up to 5 billion francs, shrinking reserves and pressure on pensions.

Susanne Vinzenz-Stauffacher, co-president of the FDP, which is leading the opposition campaign, said the government should control spending rather than repeatedly raising taxes. Although food would be exempt from the increase, she said the standard rate applies to many other goods and services, including haircuts, home repairs and furniture, adding to costs for families and middle-income households.

The FDP argues that a broader reform of the state pension scheme would be a better solution, potentially including a higher retirement age. The SVP, employer organisations and business groups also oppose the proposal. The government and parliament, along with the Social Democrats, Greens, Centre Party and trade unions, support it.

A non-representative SRF community poll found strong support for the 13th pension payment, but respondents differed on how it should be funded. Suggestions included higher payroll contributions, increased federal funding and higher taxes on wealth, inheritances and capital income.