Councils can decide on the introduction of individual taxation
Published: Wednesday, Feb 21st 2024, 15:10
Updated At: Wednesday, Feb 21st 2024, 15:11
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Parliament can decide on the abolition of the marriage penalty. On Wednesday, the Federal Council adopted the dispatch on the introduction of individual taxation. As announced, it prefers the route via a law and rejects a new constitutional article.
The Federal Council therefore recommends rejecting the popular initiative "For individual taxation independent of marital status (tax justice initiative)" of the FDP Women in favor of the indirect counter-proposal, as it wrote. The same goal could be achieved more quickly with a new federal law on individual taxation. "No constitutional provision is needed to introduce individual taxation," Finance Minister Karin Keller-Sutter told the media in Bern.
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.
By switching from married couple taxation to individual taxation, the proponents want to abolish the so-called marriage penalty and create positive incentives to earn a living. The principle is as follows: in future, married couples should be taxed in the same way as unmarried couples and complete two separate tax returns.
Several hurdles await
The Federal Council had already decided on the key parameters of the reform in August 2023 based on the results of the consultation process. The bill was rejected by the majority of parties and cantons. The tenor was that the radical restructuring of the married couple taxation system would create new injustices. Over the past two decades, several attempts to completely abolish the marriage penalty had failed.
Nevertheless, the Federal Council pressed ahead with the project that Parliament had requested as part of its legislative planning. "We always fulfill parliament's orders - sometimes gladly and sometimes less gladly," said Keller-Sutter. Individual taxation has advantages and disadvantages. It was now up to Parliament to decide how to proceed.
It is clear that the project still faces several hurdles. Even if parliament and the people were to approve individual taxation, there would be a long transition period, according to Keller-Sutter. "The cantons have requested ten years for implementation." She does not expect individual taxation to be implemented before the mid-2030s.
One billion francs missing
According to the bill passed by the Federal Council, the income and assets of married couples are to be divided according to their circumstances under civil law, 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.
On the other hand, the deduction for households with only one adult is to be waived. There is also no special deduction for married couples with only one income.
According to the Federal Council's plans, individual taxation is envisaged at all levels of government. The cantons would therefore have to implement the reform at cantonal and municipal level. The impact on cantonal taxes is unclear, as the cantons are free to set their own rates and deductions.
With regard to direct federal tax, the Federal Council estimates a shortfall in revenue of around CHF 1 billion per year for the 2024 tax year. Of this, the federal government will bear around CHF 800 million and the cantons around CHF 200 million.
Certain people should pay more
The Federal Council wants to adjust the tax rate. The tax rates for low and middle incomes are to be lowered and slightly increased for very high incomes.
The Federal Council wrote that the rate adjustments would enable the reform to have a more even tax relief effect across income brackets. "According to estimates, the indirect counter-proposal will reduce the tax burden for a clear majority of taxpayers."
For married couples with only one income or a low second income, however, the reform of direct federal tax will lead to certain additional burdens, according to the Federal Council. This particularly affects married couples with only one income and children.
©Keystone/SDA
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