Are motorists the cash cows of Switzerland?

Voters decide whether all the revenue from the mineral oil tax should go towards road infrastructure Keystone

Following voters’ approval in February of a plan to build a second road tunnel through the central Alps, Switzerland’s car lobby is experiencing increasing support for its so-called ‘milk cow initiative’. It will come to a nationwide vote on June 5.

The proposal calls for the revenue from the mineral oil tax to be exclusively used for financing road construction. Up until now, around CHF1.5 billion ($1.57 billion) of this revenue has gone towards the overall state budget.

Car owners pay around CHF7.2 billion in taxes and duties into the treasury each year. Automobile associations even put this figure at CHF9 billion, as they add revenues deriving from the value added tax.

The associations complain that road users are increasingly “milked” for money, like cows. Their proposal, which is officially called Initiative for fair traffic funding, aims to make up the financial shortfall for road infrastructure measures.

According to the proposed initiative, the necessary funds should be secured by taking around CHF3 billion from mineral oil tax revenues. Only 50% of the revenue, which translates into CHF1.5 billion a year, is currently earmarked for road funding. The remaining 50% goes towards the general budget.

According to the initiators, road users’ fees and taxes have more than sextupled since the 1960s.

Doris Fiala Keystone

“Motorists contribute about one sixth to the total federal finances. However, a substantial part of this money does not go towards road maintenance but towards financing other projects,” says Doris Fiala, a member of the initiative committee.

Fiala, from the centre-right Radical Party, calls for compliance with the ‘polluters pay’ principle. She also advocates for a clear unbundling of the finances.

“I want to be able to see where every single franc goes,” she says.

She emphasises that she does not want to put public transport at a disadvantage, but is keen to promote more balanced financing. However, she deems the cross-financing from road to rail as disproportionate.

“Roads are by far the most important mode of transport: 75% of passenger transport happens on the road. Only about 19% is by rail.”

Roads, she says, are not only used by cars but also by bicycles, buses and coaches. “Even tram rails are on the roads. Nevertheless, roads don’t get the treatment they deserve.”

‘Criminally neglected’

Despite ever-increasing tax rates and the growing popularity of road travel, road maintenance and expansion have been criminally neglected, according to the car lobby.

But Evi Allemann, parliamentarian for the leftwing Social Democratic Party and president of the Environmental Transport Association, says the initiators’ arguments are just “the car lobby moaning to get more money”.

Evi Allemann Keystone

According to Allemann, who advocates for environmentally friendly transport, driving a car has actually become cheaper over the past few years, while public transport prices have risen by around 30%.

She thinks it is only fair that car taxes and duties are only partially used for roads. “Where would we end up if taxes levied on theatre tickets only went towards promoting culture, or if money from the alcohol tax were only used for addiction prevention or keeping our pubs alive?”

She agrees that a good transport network is essential for economic prosperity, emphasising that the Swiss road and rail network is already extremely well developed. Unlimited expansion of the road network would not eliminate traffic jams, she says.

“Don’t invest in concrete – invest in intelligence. We could offer incentives to better distribute traffic or reduce the number of cars on the roads. Mobility – also concerning public transport – has reached its limits,” she says.

Allemann considers the existing transport financing well-balanced. “Changing it would be dangerous. If we invested the additional CHF1.5 billion in roads, the money would be missing elsewhere.”

The government – including Finance Minister Ueli Maurer, whose conservative right Swiss People’s Party is in favour of the initiative – shares this point of view. Maurer worries that passing the initiative would throw the state budget off balance.

“This could result in drastic austerity measures,” the finance ministry said in a statement, adding that cuts would have to be made in the army as well as in the agricultural, educational and research sectors.

Limits of mobility?

For long-term road financing, the government is proposing the creation of a National Road and Agglomeration Fund. This would be funded with existing financial sources (mineral oil tax, mineral oil tax surcharge, motorway vignette) as well as with the car import tax. Until now the latter has been going to the federal treasury.

The fund, which is an informal counterproposal to the initiative, is currently being discussed in parliament. Even though the Senate has agreed to the government’s proposal, it wants to make some amendments that would address ideas proposed in the “milk cow” initiative. The debate in the House of Representatives, where the car lobby has a stronger presence, is still pending.

“The [fund] acknowledges that we are faced with a threatening gap in financing,” says parliamentarian Fiala. “However, it wants to fill this gap with yet another increase in fuel taxes.”

The initiators of the initiative don’t like this. For this reason, their proposal demands that voters should also have the final say on any plans to introduce or raise taxes, duties or fees.

Evi Allemann will endorse the government’s proposal.

“In the long run, the fund will finance road maintenance as well as specific expansions of the traffic infrastructure, especially in urban areas. The ‘milk cow’ initiative would put too much money into the pot for road maintenance, which could eventually lead to pointless traffic projects.”

For and against

The Association of Swiss Automobile Importers is the force behind the milk cow initiative. In addition to the three main national road transport groups, the influential Association of Small and Medium-Sized Enterprises also supports the initiative. The Swiss People’s Party recommends voting for the initiative as well.

The initiators were also hoping to get some support from the Swiss business sector. However, the umbrella organisation, economiesuisse, has decided to campaign against it.

The cabinet is also opposed.

Representatives of the Social Democratic Party, the Christian Democratic Party, the Green Party and the Conservative Democratic Party have joined the ‘No’ committee. Even within the ranks of the centre-right Radical Party, the majority seems to be against the initiative.

The Swiss Association of Public Transport, the Swiss Traffic Club as well as the Farmers’ Association are also against the initiative.

Translated from German by Billi Bierling