Parliament approves combined corporate tax and pensions bill

Swiss President Alain Berset speaking in Parliament on Monday, September 17. Keystone

The Swiss parliament has approved an ambitious government bill aiming to combine the contentious issue of corporate tax reform with changes to the pension system. The package could yet come to a nationwide vote in 2019.

The repackaged bill was drawn up after Swiss voters threw out an initial plan for a sweeping reform of corporate tax in the country in 2017, judging it to be too generous to business interests.

Switzerland has come under intense pressure from the European Union (EU) and the Organisation for Economic Cooperation and Development (OECD) to change “harmful” tax practices in the existing tax regime. 

The current idea proposed by the government, approved by the Senate on Monday, makes various concessions both to right- and left-wing concerns, and notably includes a significant reform to the pension system – another issue high on the Swiss political agenda.

The major linkage is that for each franc that the Swiss state or cantons “lose” due to the reform of corporate tax, a concessionary franc will be paid them by way of the first pillar, which deals with pensions and social assistance.

+ The Swiss three-pillar system, explained

To finance this, a slight raising of the social security tax rate would be necessary: +0.15% to 4.35% both for employers and workers, an increase that would bring in some CHF1.2 billion ($1.25 billion) in 2020.

Despite its likely passage through Parliament (a final vote is scheduled for September 28), political opposition remains: right-wing parties criticise the linkage between corporate tax and social security full-stop; on the left, some are worried about lost tax revenues.

The youth section of the Greens has promised to collect the signatures necessary to force a referendum on the issue: if they gather the requisite 50,000 within 100 days, a national vote in Spring 2019 is possible.