Hotels lose bid for reduced tax rate

Parliament has thrown out a proposal for a temporary exemption for hotels from value added tax (VAT).

The Senate on Tuesday followed the House of Representatives and the government in rejecting the proposal put forward by representatives of mountain cantons, including Valais, Graubünden and Bern.

Supporters argued that some tourist regions were suffering from a ten per cent slump in overnight stays as a result of the expensive Swiss franc for foreign guests.

But opponents said preferential treatment for the hotel sector was unjust and would lead to a drop in revenue of about SFr160 million ($174 million) annually.

Hotels already benefit from a reduced VAT rate of 3.8 per cent compared with the full rate of  eight per cent.

The Swiss Hotels Association said the parliamentary decision was disappointing and called for measures to lower prices on food imports for the industry to make up for the missing tax break.

Earlier this month, the cabinet came out against an initiative by hotels and restaurants aimed at putting hotels on par with the food sector which benefits from a VAT rate of 2.5 per cent.