Corporate tax breaks scrape through in polls

The vote on tax breaks passed by a whisker Keystone

Voters have narrowly approved tax breaks for small and medium-sized enterprises (SMEs) in a nationwide vote on Sunday.

A ban on training flights by the Swiss Air Force over tourist regions, proposed by a leading environmental group, was overwhelmingly rejected.

The proposal on banning training flights was rejected by about 68 per cent of the vote, with 32 per cent in favour, according to officals.

But the fiscal reform proposal passed with a margin of just one per cent, or around 19,000 votes. The tax proposal came to a nationwide vote after being challenged by the centre left.

Turnout was below average at 38 per cent.

Opponents of the tax breaks argued the reform will result in a shortfall in revenue for social security schemes because it offers shareholders a reduction in tax on dividends and goes against the principle of fairness.

Companies are being encouraged to pay out higher dividends instead of increasing employees’ salaries, according to the centre-left Social Democratic party.

The Green Party and the trade unions pointed out that only the well-off stand to benefit from the tax breaks.

They have threatened to take their case to the Federal Court, Switzerland’s highest instance.

Appeals have already been lodged against similar overhauls of the tax system in two of Switzerland’s 26 cantons. Under the country’s three-tier fiscal policy, cantons also levy taxes on businesses and individuals.

Administrative burden

The main centre-right parties as well as the government and the business community said the fiscal reform would give a boost to the economy by encouraging investments and creating jobs.

Supporters of the reform argued that SMEs – which form the backbone of the Swiss economy – stand to benefit from a set of planned measures aimed at reducing the financial and administrative burden for companies.

Gerold Bührer, president of the Swiss Business Federation (economiesuisse), said Switzerland is one of the last industrialised countries to impose a tax on company profits and on dividends at the same time.

He also hinted at putting forward plans to call for cuts in tax rates on profits.

Noise pollution

Franz Weber and his environmental organisation, Helvetia Nostra (Our Switzerland), wanted to ban all military exercises using fighter jets over tourist areas in peacetime.

The noise of military aircraft has an adverse impact on humans and animals and is damaging to the environment, economy and tourism, according to the group.

Opponents of the people’s initiative, including the government and centre-right and rightwing parties, dismissed the proposal as an attack against the country’s sovereignty. They said it was incompatible with national security objectives.

The Swiss Air Force fleet, which includes 118 F/A-18 Hornet and Tiger jets, has been revamped and the number of airbases reduced over the past few years.

swissinfo, Urs Geiser

In brief

Corporate tax for holding companies came into force ten years ago.

In 2004 voters turned down a proposed tax package of tax cuts for families, property owners and shareholders.

Under Switzerland’s three-tier tax system, the federal, cantonal and local authorities levy taxes on individuals and businesses. The highest proportion goes to the cantonal authorities.

Voting

Sunday’s ballot was the first nationwide vote in Switzerland in 2008.

About 4.9 million citizens aged 18 or over were eligible to vote.

Turnout was below average at 38 per cent.

Polls also took place in several cantons and communes on a variety of issues.

Nationwide votes usually are scheduled on four Sundays during the year.