Cantons force vote on tax cuts

Switzerland's cantons are set to challenge the planned tax cuts of SFr2 billion Keystone

The Swiss cantons have made history by forcing a referendum on proposed tax breaks totalling over SFr2 billion ($1.54 billion).

This is the first time they have succeeded in calling a nationwide vote challenging a decision of parliament since 1874.

On Tuesday, Vaud gave the referendum the green light by becoming the eighth canton to vote in favour of it.

Eighty-nine of the 154 parliamentarians supported the referendum in the first reading, but the decision will only be final after a second reading, which is expected to go the same way.

“I am sure the outcome will be the same. The difference in votes was too big,” said Pascal Broulis, a canton Vaud parliamentarian.

Democratic instrument

Under Switzerland’s law at least eight cantons have to join together to call a cantonal referendum – a democratic instrument that has existed since 1874 and has never before been used.

Apart from canton Vaud the cantons of Basel City, Bern, St Gallen, Graubünden, Solothurn, Valais and Obwalden have so far supported the referendum.

The cantons have until October 9 to submit their referendum, which will then be verified and a date set for the vote.

The cantonal referendum deals a severe blow to the planned tax cuts, as it prevents the tax package from becoming law at the beginning of next year.

Financial burden

Experts say the fact that a cantonal referendum has been called is due to the great financial burden on the cantons.

“Up until the late nineties the cantons were able to pass on their expenses to the communities, however, they can no longer afford to take on any more financial burden,” said Jeremias Blaser of the University of Fribourg.

Blaser argues that the decision to support the referendum depended on the wealth of the canton.

“Most of the cantons that have voted against the referendum, namely Zug, Aargau, Neuenburg, Lucerne, Thurgau and Schwyz are rich cantons.”

Fiscal package

Parliament approved the tax cuts, which are part of the 2001 fiscal package, in June this year, alarming the already cash-strapped cantons as they stood to lose over SFr500 million in revenue.

Families would be the biggest beneficiaries, pocketing tax breaks totalling SFr1.2 billion. These include deductions for children and childcare.

The package also included a SFr480 million break for homeowners, and a reduction in stamp duty worth SFr310 million.

swissinfo with agencies

Key facts

The cantonal referendum was created in 1874.
It is the first time that a cantonal referendum has been called.
The referendum must be supported by at least eight cantons.
The tax cuts voted by Parliament are worth a total of SFr2.01 billion.