Federal Council wants to finance 13th AHV pension with higher VAT
Published: Wednesday, Aug 14th 2024, 14:20
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VAT is to be increased to finance the 13th AHV pension. This is what the Federal Council is proposing. It will not decide how much the VAT should be increased until the fall. Parliament is due to discuss the proposal in the winter session.
The Federal Council took into account the revised financial outlook for the AHV. Expenditure on old-age and survivors' insurance is likely to be around CHF 4 billion lower in 2033 than previously assumed.
Deficit growing less quickly
The costs of the 13th AHV pension will be around CHF 4.2 billion in 2026 and just under CHF 5 billion in 2030, as the Federal Council wrote on Wednesday. The revised financial outlook would have little impact on this.
As already announced, the AHV contribution result will become negative from 2026 with the introduction of the "thirteenth". According to the new calculations by the Federal Social Insurance Office (FSIO), the deficit will grow less rapidly in subsequent years.
The Federal Council therefore considers the increase in VAT to be appropriate for financing the 13th AHV pension. It also believes that the 13th pension should be financed sustainably from the outset.
In the consultation process in early summer, it had put two financing options up for discussion: one with higher wage contributions alone and a second with a combination of higher wage contributions and more VAT. The Federal Council wrote that a majority supported the second option in the consultation process.
Controversial proposal
Nevertheless, the increase in VAT is likely to have a difficult time in parliament. The SVP and FDP rejected tax increases for the 13th pension outright. The centrist party, the business umbrella organization Economiesuisse and the employers' association, on the other hand, were in favour of higher VAT.
And the SP recalled that it had argued for higher wage contributions in the referendum campaign for the "thirteenth". The Greens also backed higher wage contributions.
The Federal Council has relented somewhat on the federal contribution to higher AHV expenditure: Instead of the reduction from 20.2 percent of expenditure to 18.7 percent, it is now proposing a reduction to 19.5 percent. This means that the federal budget will contribute around CHF 500 million to the 13th AHV pension in 2030, it wrote.
The reduction in the federal contribution should also be covered by the increase in VAT, he has now written. The aim is to achieve a fund level of 100 percent of AHV expenditure by 2030. The Federal Council intends to determine the extent to which VAT should be increased in the fall based on the AHV's financial prospects.
In addition, the Federal Council wants to maintain the plan to pay the 13th AHV pension annually in December from 2026. A clear majority supported this in the consultation process, he wrote.
Message in the fall
The Federal Council intends to submit the dispatch to Parliament in the fall. The Councils should be able to discuss the bill in the coming winter session and the spring session in 2025. The popular initiative for a 13th AHV pension was approved by voters in March 2024.
The Federal Council intends to draw up two bills for the legislative amendments to implement the 13th pension and for its financing. This will ensure that the amendments to the law to implement the referendum can enter into force, even if there are delays in financing, he wrote.
A change to VAT must be put to the ballot box. A referendum can be held against the amendments to the law.
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