Single VAT rate planned

The government has come out in favour of a standard 6.1 per cent Value Added Tax (VAT) and the abolition of most special rates.

Finance Minister Hans-Rudolf Merz said the proposal was aimed at introducing a more efficient and transparent system while reducing the administrative burden for companies.

The plan, which still needs approval by parliament and voters, is expected to make household products, public transport, cars, fuel and electronic equipment cheaper.

However, it would probably prompt price hikes for food, the hotel and health sectors as well as for education, culture and sport.

Switzerland currently has a VAT rate of 7.6 per cent, with special lower tariffs for the hotel sector and for essential consumer goods such as food.

The proposed rate of 6.1 per cent, the lowest in Europe, has already been criticised by all the main political parties.