Government unveils new round of spending cuts

Hans-Rudolf Merz announces plans for new spending cuts Keystone

The government has announced plans to axe hundreds of jobs and raise taxes as part of a new round of spending cuts over the next three years.

The latest proposals come less than a year after parliament approved a record SFr3 billion ($2.4 billion) cost-cutting programme.

The finance minister, Hans-Rudolf Merz, announced on Friday that the government had set itself the target of doing away with a budget deficit of SFr4.4 billion by 2007.

At a news conference in the Swiss capital, Bern, he said all seven government ministries had been ordered to reduce spending. Around 1,000 jobs are set to go within the next three years.

The government also tabled proposals to raise taxes on tobacco and alcohol.

The cabinet plans to reduce the public deficit by about SFr1.1 billion next year, by SFr1.5 billion in 2006 and SFr1.8 billion in 2007.

More precise details of where and how the cuts will be implemented are expected to be presented in the next few months.

Under the terms of Switzerland’s political system, all proposals will be put to the country’s regional authorities, the trade unions and employer associations for consultation before they are presented to parliament.

Mixed reaction

There was mixed reaction to the proposals from the country’s four main political parties and the business community.

The rightwing Swiss People’s Party criticised the planned tax hikes, while the centre-right Radicals and Christian Democrats warned against another round of sweeping cuts to public spending.

The centre-left Social Democrats argued that spending cuts were not the only solution to reducing the deficit.

The Swiss Business Federation, economiesuisse, welcomed the proposals, adding that cuts of up to SFr3.5 billion were needed to shore up the federal coffers.

Last December parliament approved a first round of spending cuts, totalling a record SFr3 billion, in a bid to rein in the national debt.

Research, transport as well as the environment were the main losers in the first round of cuts.

swissinfo with agencies

In brief

The cabinet wants to shed up to 1,000 jobs in the federal administration by 2008 and raise the tax on tobacco by SFr0.50 per packet of cigarettes and on alcohol by SFr6 a litre.

Further details of the spending cuts still have to be announced before the proposals go to the cantons, employers’ organisations and the trade unions for consultation.

Parliament is expected to debate the proposals during its regular winter session in December.

Key facts

The national debt is expected to reach SFr134 billion ($107 billion) by the end of the year.
Switzerland has to pay SFr10 million in interest on its debt every day.
The government wants to rid itself of a SFr4.4 billion deficit over the next three years.