Government handed triple defeat by voters

Cabinet ministers Couchepin (left) and Merz were disappointed by the results Keystone

More than two-thirds of voters have rejected a package of government proposals for tax breaks, pension reforms and a rise in Value Added Tax.

The outcome is a blow to the government and parliament, which put forward all three proposals.

It is the second time this year that Switzerland’s political establishment has suffered a triple defeat at the ballot box.

None of the votes in February on transport, rent and justice issues went the government’s way.

Final results on Sunday show that the tax breaks were rejected by 65.9 per cent of voters, pension reforms by 67.9 per cent and VAT by 68.6 per cent. Turnout was relatively high at 50.3 per cent.

Reacting to the setback, the government insisted that tax and pension reforms were still necessary.

Interior Minister Pascal Couchepin said he intended to present another proposal to raise VAT, while the finance minister, Hans-Rudolf Merz, said he would consider cutting stamp duty.

Out of step

The centre-left Social Democrats, who opposed both the federal tax package and the pension reforms, said they were delighted by the results.

The party said the outcome was a defeat for the Right, which had “lost touch with people’s concerns”.

“The Social Democratic Party is the clear winner in the most important vote in years,” said party president Hans-Jürg Fehr.

The votes had been seen as a key political battle between Switzerland’s centre-right parties and the Centre-left.

They were also considered a vote of confidence in the Centre-right in parliament and the cabinet.

The two main parties at the centre of the political spectrum – the Radicals and the Christian Democrats – were weakened in last October’s parliamentary election after the rightwing Swiss People’s Party and the centre-left Social Democrats improved their share of the vote.

Against change

For Emanuel von Erlach, a political scientist at Bern University, Sunday’s results were further proof that the Swiss do not like radical change or complicated proposals.

“The cabinet and parliament might become a bit more modest in the way they present their aims in the future,” he told swissinfo.

“They have to realise that the electorate has a power of veto in the political process and that the Swiss favour compromise.”

Parliament was proposing to cut SFr2 billion ($1.5 billion) a year in federal taxes, benefiting families, property owners and shareholders in a bid to spur economic growth.

It also wanted to trim old-age pensions and raise the retirement age for women to 65 (from 64) by 2009 in order to shore up the state old-age pension scheme and save some SFr925 million annually.

Also on the cards was a 1.8 per cent increase in VAT, which is currently at 7.6 per cent, to raise funds for the pension scheme and the heavily indebted invalidity benefit scheme.

But the Swiss appear to have been swayed by the arguments of the Left that the rich stood to benefit the most from tax cuts and that the already cash-strapped cantons would suffer.

Opponents also argued that the pension reforms would weaken the most important pillar of the country’s social security system.

swissinfo with agencies

Key facts

Tax breaks: rejected by 65.9%.
Pension reforms: rejected by 67.9%.
VAT increase: rejected by 68.6%.
Turnout was 50.3%.

In brief

Three issues were turned down by voters this weekend:

A package of federal tax cuts amounting to SFr2 billion for families, property owners and shareholders.

A proposal to cut state old-age pension scheme benefits to the tune of SFr925 million per year.

A 1.8% increase in Value Added Tax to shore up state insurance schemes for the disabled and for old-age pensioners.