Federal Council outlines next package to restructure federal finances
Published: Wednesday, Jan 24th 2024, 15:00
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A special account for refugees from Ukraine, less spending on asylum and the ETH and a higher tobacco tax: this is how the Federal Council wants to ease the burden on the ailing federal budget. Otherwise, a deficit of CHF 2.5 billion is looming in the coming year.
The federal finances have been in difficulties for some time. According to the Federal Council, the situation will worsen in the coming years. The reasons for this include rising expenditure on AHV, premium reductions, asylum and the army.
"As early as 2025, the shortfall is likely to amount to CHF 2.5 billion or more," the Federal Council wrote on Wednesday. Because the debt brake enshrined in the constitution does not allow for such a large deficit, something must be done on the revenue and expenditure side.
Extraordinary booking
Just one month after the conclusion of the last - sometimes emotional - budget debate in parliament, the Federal Council has now taken the first preliminary decisions to make next year's budget more balanced. In order to at least partially close the funding gap, it intends to tackle various items.
The Federal Council wants to relieve the budget by over one billion Swiss francs by booking expenditure for asylum seekers from Ukraine as an extraordinary item for the fourth time in a row. This would circumvent the debt brake.
From 2026, the Federal Council wants to reduce the build-up of debt and properly budget expenditure for refugees from Ukraine, as it writes. "All asylum expenditure should be properly financed again by 2028 at the latest."
Daycare template postponed
The Federal Council wants to set aside a further CHF 436 million less next year for daycare co-funding. The corresponding bill on supplementary childcare will come into force in 2026 at the earliest, he wrote.
It is still unclear which direction this will take. The responsible committee of the Council of States is expected to submit an alternative model for consultation in the spring, which is to be financed via the family allowance system and should place a significantly lower burden on the federal budget.
The Federal Council also wants to reduce federal contributions to unemployment insurance (ALV) by CHF 340 million. According to current forecasts, the ALV's equity capital will grow steadily despite the cuts, according to the federal government. ALV benefits will not be affected.
Fewer deposits in several funds
The situation is similar for the rail infrastructure fund. This is well filled, which is why the Federal Council wants to bring forward the already decided staggered reduction in the contribution and implement it in two years instead of three. Specifically, the contribution is to be reduced by CHF 300 million in 2025 instead of the previously planned CHF 150 million.
The Federal Council wants to save an additional CHF 100 million at the ETH. It justifies this by stating that the university currently has reserves of CHF 1.4 billion. The fulfillment of the ETH Domain's tasks is not endangered by the cuts.
The Federal Council wants to completely abolish the contribution to the Regional Development Fund in 2025 and halve it in 2026 and 2027. Parliament had already spoken out in favor of halving it during the 2024 budget consultation. According to the Federal Council, the fund is currently well endowed and liquidity is ensured.
Higher tobacco tax
Other preliminary decisions by the Federal Council are likely to cause a stir. For example, tobacco tax is to be increased. This measure should generate additional revenue of at least around CHF 35 million, according to reports. The existing law gives the Federal Council the necessary leeway to increase individual product categories. However, the Federal Council first wants to consult the economic committees of both chambers.
The Federal Council wants to examine a reduction in costs in the areas of asylum and status S of an unknown amount. According to the Federal Council, it intends to discuss a package of measures in the spring.
If all these items are added together, the federal budget would be relieved by over CHF 2 billion in the coming year. The Federal Council intends to rectify the remaining deficit for 2025 of around half a billion in mid-February, as soon as the new revenue estimates are available.
Further savings packages on the horizon
According to the Federal Council, this does not yet include possible additional expenditure, for example for agreements with the EU, participation in the reconstruction of Ukraine or the additional costs of a possible further expansion of the social security system.
According to the Federal Council, further savings packages are needed in the medium term. It wants to "quickly tackle a fundamental review of the federal government's tasks and subsidies". Possible directions should be available by the end of March, according to the statement.
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