The popular initiative of the Socialist Youth “For the Future” could cause tax losses. The Federal Council, which launched its campaign on Monday for the vote on November 30, fears the exile of the most fortunate.
The initiative “For a social climate policy financed in a fiscally fair manner” (initiative for the future) calls for a 50% tax on inheritances and donations from an exempt amount of 50 million francs. This money would be used to finance climate measures, which are currently insufficient in the eyes of the initiators, while helping to reduce growing inequalities.
In order to prevent the flight of big fortunes, the text should come into force on the day of the vote with retroactive effect. According to the calculations of the initiators, this tax would bring in around six billion francs per year, two thirds for the Confederation and one third for the cantons.
“Problematic” text
“Global warming is one of the great challenges of our time. The Federal Council shares the objective of the initiative. But a climate policy does not exist without stable and effective financing,” and the initiative does not guarantee it, assured Finance Minister Karin Keller-Sutter at a press conference in Bern.
The text also does not respect federalism, which leaves the cantons their autonomy in matters of taxation. It does not guarantee that each franc is used where it is beneficial. And it is contrary to the polluter pays principle. All of this is very “problematic” in the eyes of the Federal Council.
Drop in revenue?
The richest 1% of taxpayers already pay nearly 40% of taxes, or more than 5 billion francs in tax revenue per year. The implementation of the initiative could push these people and companies to leave Switzerland, continued Minister PLR.
According to an analysis commissioned by the federal administration, these people are very mobile and many change their domicile when inheritance taxes increase. The new tax could also dissuade other high-income people from settling in Switzerland.
Currently, it is not known how many people will be directly affected by the initiative, said Karin Keller-Sutter. According to estimates from the Federal Tax Administration, some 2,500 taxpayers in Switzerland had assets in excess of 50 million francs in 2021, for an overall taxable wealth which would amount to around 500 billion francs.
The actual revenue that the new inheritance tax could bring will therefore depend heavily on the reaction of wealthy people: if many of them leave Switzerland or give up on settling there, the new tax will bring in much less than is theoretically possible, or even cause tax losses. The administration estimates these losses between 200 million and 3.6 billion francs, depending on the scenarios, we read on this subject in the voting brochure.
The cantons want to decide
Today, the Confederation does not levy tax on inheritance and donations. On the other hand, almost all cantons do so, generally with exemptions for surviving spouses and descendants. In terms of the share of inheritance and gift taxes in total tax revenue, Switzerland is within the average of industrialized countries, according to the Confederation.
The cantons are convinced that they must be able to choose for themselves how they allocate their resources in favor of the population. The initiative would encroach on their room for maneuver, said Markus Dieth, president of the Conference of Cantonal Governments, who was also present.
The title of the initiative is “attractive”. But now is not the time to embark on experiments, concluded the Aargau minister.
