Swiss parliament scraps import duties on industrial products

The prices of cars, motorbikes and bicycles in Switzerland were 6% higher than in the European Union in 2020, according to Eurostat. Keystone / Steffen Schmidt

The price of a new car or electrical appliance imported into Switzerland looks set to drop following parliament’s decision to remove import duties on certain industrial goods.

On Wednesday, the House of Representatives followed an earlier Senate decision to scrap customs duties on imported industrial products. The formal measure was taken as part of efforts to tackle Switzerland’s unenviable reputation as a “high price island”.

Swiss prices are notoriously high for many products and services when compared globally. In 2020, overall price levels for consumer goods and services in Switzerland were 70% above the European Union average, according to EurostatExternal link. Household appliances were 26% more expensive than the EU average, while prices for cars, motorbikes and bicycles were 6% higher; food prices were 65% higher. Companies also complain they are charged more for the same supplies than EU competitors.

Removing customs duties will cost the Swiss government an estimated CHF560 million ($543 million) a year. However, the positive boost to the economy will be CHF860 million annually, Economics Minister Guy Parmelin said. Increased industrial activity and trade will compensate the loss with additional tax revenue, he added.

The move was supported by the right-wing People’s Party and the centre-right Radical Party, which believe it will contribute to strengthening the Swiss economy and to firms’ competitiveness.

Left-wing parties, however, warned of the financial impact. This measure is aimed at subsidising the Swiss export industry, said Social Democrat Samuel Bendahan. His colleague Jacqueline Badran argued that it was misleading to scrap customs duties on industrial goods while keeping them for agricultural products.

The removal of tariffs on industrial goods covers a range of consumer goods, including bicycles, motor vehicles, household appliances and clothing. Industrial goods also include some raw materials and part-built products that enter the country to be completed in Swiss factories. They generally do not include agricultural or fishing products.

Other countries have unilaterally scrapped customs duties on industrial products, including Hong Kong, Singapore, Canada, Iceland, Norway and New Zealand.