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Switzerland proposes VAT hike to fund army budget increase
🇨🇭 Switzerland /Economy & Trade

Switzerland proposes VAT hike to fund army budget increase

From Le Temps · () French

Translated from French, summarized and contextualized by DistantNews.

At a glance

News Named sources New plan
  • Switzerland's Federal Council proposes increasing the army budget by 31 billion francs by 2028.
  • The plan involves a temporary 0.8 percentage point VAT hike to fund defense spending.
  • Political parties hold mixed views, with "The Centre" supporting the proposal, while the FDP, Green Liberals, and Social Democrats express concerns about the funding method and overall cost.

Switzerland's Federal Council is seeking to bolster the nation's defense capabilities with a proposed 31 billion franc increase in the army budget by 2028, citing a deteriorating geopolitical situation. To finance this expansion, the government suggests a temporary 0.8 percentage point increase in the value-added tax (VAT), limited to ten years, which would require a constitutional amendment and a public vote in summer 2027.

security is a public good which benefits all inhabitants of the country. This justifies that all households participate in solidarity in financing security

— The Centre partyThe Centre party's justification for supporting the VAT increase to fund defense.

The proposal has divided the political landscape. "The Centre" party, aligned with Defense Minister Martin Pfister, fully backs the plan, arguing that national security is a public good that justifies shared, solidarity-based financing. They also believe the VAT increase can be implemented in a socially acceptable manner, with exemptions for health insurance premiums and rent.

However, the FDP (The Liberals) agrees with the need for enhanced defense but strongly opposes funding it through a VAT hike, arguing it unfairly burdens the middle class. The Green Liberals also acknowledge the security concerns but question the justification for the additional funds and deem the VAT-only financing "unbalanced." They advocate for cost-saving measures like focusing on core capabilities and international cooperation, suggesting the federal council's estimated annual financial needs of three billion francs could be reduced.

A credible defense capability is of elementary importance for the protection of the population and the sovereignty of our country

— FDPThe FDP's acknowledgment of the need for a strong defense.

Left-leaning parties, including the Social Democrats and the Greens, also oppose the plan, primarily due to the proposed financing mechanism. The debate highlights a fundamental disagreement on how Switzerland should fund its defense modernization in an increasingly uncertain global environment, with significant implications for both national security and the Swiss taxpayer.

the proposed financing, solely through VAT, is unbalanced

— Green LiberalsThe Green Liberals' criticism of the proposed funding method.
DistantNews Editorial

Originally published by Le Temps in French. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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