Exciting starting position on individual taxation in the National Council
Published: Monday, Sep 16th 2024, 04:40
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In future, every person in Switzerland should pay taxes individually, regardless of their marital status. On Monday, the National Council will debate a popular initiative with this demand and a draft law. The initial situation is exciting and the debate is likely to be lively.
This is because only a narrow majority of the pre-advisory committee supports the FDP Women's Tax Fairness Initiative and the law on individual taxation drafted by the Federal Council.
Time for a change
The Committee for Economic Affairs and Taxation (WAK-N) approved the initiative and indirect counter-proposal by 13 votes to 12. Representatives of the SVP and the Center Party are in the opposing camp.
Currently, married couples and same-sex couples living in a registered partnership are taxed jointly in Switzerland. If both people are gainfully employed, they sometimes have to pay higher taxes than cohabiting couples with two separate tax assessments due to progression.
The majority believe the time is ripe for a change. They hope that the marriage penalty will be abolished and that second earners will increasingly take on paid employment in view of the shortage of skilled workers.
The minority, on the other hand, wants to maintain the understanding of marriage as an economic partnership. It also warns of the great effort involved in changing the system, both for the authorities and for taxpayers. This is because individual taxation should not only be carried out by the federal government, but also by the cantons and municipalities.
Faster with the law
The indirect counter-proposal to the tax justice initiative comes from the Federal Council. It believes that the goal can be achieved more quickly with legal provisions than with a constitutional article. Either way, however, the introduction of individual taxation is likely to take years.
There are several minority motions on the indirect counter-proposal. The left wants to integrate supplementary childcare into the proposal. Representatives of the SVP and the Center Party, on the other hand, want to continue to tax married couples jointly. They are proposing a bill that does away with the marriage penalty in taxes. Finally, the SVP and another minority are proposing adjustments to the tax rates for families and married couples.
According to the Federal Council's proposal, the income and assets of married couples should be divided according to their civil law circumstances, as is already the case for unmarried couples. The child deduction for direct federal tax is to be increased from the current CHF 6,700 to CHF 12,000.
One billion francs less
Based on the 2024 tax year, individual taxation is likely to lead to a reduction in direct federal tax revenue of around one billion francs per year. The federal government will bear around CHF 800 million of this and the cantons CHF 200 million.
The impact on cantonal taxes cannot be quantified. This is because the cantons can decide for themselves on the structure of deductions and rates. The majority wants the initiative or the law to be implemented no later than six years after its adoption or the expiry of the referendum deadline.
Minority motions have been submitted to the Council to offset the financial losses. One demands a revenue-neutral design of the proposal. A second wants to partially increase progression so that the loss for the Confederation is only up to CHF 500 million per year.
©Keystone/SDA
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