Swiss Review 6/2018
Swiss Review / November 2018 / No.6 10 Politics JÜRG MÜLLER “Horse trading”was themost commonly used expression of the autumn session 2018. Finance Minister Ueli Maurer (SVP), on the other hand, described the same process as “a small masterpiece of political compromise”. The different perceptions can be explained. What was rejected by some and approved by others was indeed a somewhat unusual parliamentary affair: two distinct policy areaswere packed into a single bill, namely a corporate tax reform that is im- portant for Switzerland’s business interests and a financial injection for the old-age and survivors’ insurance (OASI). During the autumn session parliament approved the Fed- eral Act on Tax Reform and AHV Financing (TRAF). It is necessary to look into the past in order to under- stand the special mechanics of this legislative package. In 2017, twomajor reformpackages were rejected by popular votes: the Corporate Tax Reform III bill on 12 February and the Retirement 2020 bill on 24 September. The need for re- form is huge in both areas. The tax issue is under enormous time pressure, especially because Switzerland could end up on the European Union’s (EU) blacklist if there is no re- form; the EU Member States could take unpleasant coun- termeasures against Switzerland. In addition, the Organ- isation for Economic Cooperation and Development (OECD) is also exerting pressure on Switzerland over the same issue. A well-known problem The problems did not come out of the blue. They were al- ready identified in 2005. Certain cantonal tax practices are a thorn in the side of the EU, since income from abroad is taxed less heavily than domestic profits. In the eyes of crit- ics, this leads to harmful tax competition. Switzerland un- dertook to abolish the special tax status for holding com- panies and other international corporations, since this systemmade the country attractive for highlymobile com- panies. They had privileges that domestic companies did not enjoy. The tax reform is designed to ensure that all com- panies are treated equallywith regard to taxation. To offer an alternative to these previously privileged companies, certain new tax deductions were to be made available to them. However, in the opinion of the Swiss Social Demo- cratic Party (SP), parliament was unnecessarily adding fur- ther tax benefits to the Federal Council’s original bill, whereupon the SP called a referendum, only to emerge vic- torious in February 2017. Complicated control mechanism Now a new solution had to be found quickly. On the one hand, because the internationally active companies in question are of considerable importance for Switzerland, not least from a tax point of view, since they account for al- most 50percent of the federal tax revenues of legal entities; on the other hand, because of increasing time pressure. The aim of the reform is to prevent a dramatic increase in the tax burden for these companies with special status, since The unusual deal regarding taxes and old-age and survivors’ insurance (OASI) It is considered the most important and consequential deal of the current legislative period – the corporate tax reform, controversially boosted by a financial injection for the OASI. Voters have the final say on 19 May 2019. They fought for the deal regarding taxes and the OASI and must now struggle with a sceptical base: The SP Council of States members Christian Levrat and Paul Rechsteiner. Image: Keystone
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