“The most significant bill of the legislative term”
A referendum on a new financial regime is being held on 4 March.
This is a crucially important vote and, according to Finance Minister Ueli Maurer, “probably the most important bill of the legislative term”. But for once all political parties are in agreement: the referendum on 4 March concerns the new financial regime from 2021 onwards. Unless this bill is approved, the Swiss Confederation will run out of money. The bill aims to ensure the federal budget can continue to rely on income from direct federal taxes and VAT. The current financial regime expires in 2020.
One of Swiss federalism’s unique traits is that the federal tax system is always only valid for a limited period of time. It is now set to be extended until 2035. The Federal Council initially wanted to amend the federal financial regime to allow it to levy both taxes without any time limitation. However, there was opposition during the consultation procedure and it is now only set to be extended by 15 years. The main argument is that making the taxes subject to time limits and a referendum puts them on a more legitimate democratic basis.
Direct federal taxes and VAT are federal government’s two main sources of income and make up over 60 % of total federal finances. As the new 2021 financial regime officially requires an amendment to the federal constitution, it must be approved at referendum by the Swiss people as well as the cantons.