Cabinet defends controversial lump sum tax

The government has come out in favour of maintaining the system of lump sum taxation, despite criticism of special fiscal treatment for the wealthy.

However, it proposes increasing the minimum tax rates in line with recommendations of the 26 cantons, which have wide-ranging fiscal autonomy.

The amendment would make the system more transparent and less discriminatory, according to a finance ministry statement.

The cabinet rules out the abolition of the lump sum tax, saying it helps boost Switzerland’s competitive edge and save jobs, the statement added.

The minimum rate would be based on the equivalent of seven times the annual rent or rental value of the house the taxpayer lives in, rather than five.

The proposals are now to be submitted to a consultation procedure among parties, organisations and institutions before the cabinet draws up a bill to put to parliament next year.

In 2009, voters in canton Zurich decided to outlaw lump sum taxation, prompting other cantons to launch similar steps.

About 4,500 wealthy foreigners with residency status in Switzerland benefit from special tax treatment.

Ordinary Swiss residents are taxed on their stated income and wealth.

swissinfo.ch and agencies