In times of crisis, it is even more important that the federal government retain its financial wiggle room. This is how the SP justified its referendum against the withholding tax reform. As correct as the request is, the logic is wrong. Because with the reform, Swiss companies will pay more taxes in Switzerland in the future, not less. In addition, the Confederation, cantons, cities and municipalities save around CHF 60 to 200 million in interest costs each year.
The targeted review is paying off for Switzerland and its residents. It will bring back to Switzerland business that is currently carried out abroad due to withholding tax and thus bring back tax revenue. The sharp increase in corporate taxes over the last thirty years will continue. The winners of this successful tax strategy are the public sector and all individuals. Thanks to the constant increase in corporate taxes, public finances are strengthened and private taxpayers relieved.
Recover business from Luxembourg
The figures in the capital market are impressive. In 2020, around a third fewer bonds were issued in Switzerland than in 2009. The volume is only around 10 percent of GDP, and the trend is clearly downward. The situation in Luxembourg is a mirror image: since 2009, emissions have increased considerably, reaching around 23 times GDP in 2016 (Advisory Board Future Financial Centre, 2018, p.4). One important reason is tax withholding. Swiss companies are now forced to borrow abroad if they want to attract international investors.
The Federal Council and the Parliament want to put an end to this unsustainable situation in which Switzerland is ceding the tax base to other countries. If the reform is successful, Swiss companies will relocate their financial departments and thus pay more taxes in Switzerland, not less.
SP operates with wrong numbers
The reform revenue shortfall is extremely small and will be outweighed by additional revenue. On the one hand, the reform only applies to bonds. In the case of dividends, which generate billions of euros in income for the federal government, withholding tax will continue to apply. Parliament has also cut costs by deciding to focus the reform on new obligations. Nothing will change for all current obligations. Opponents of the reform ignore this parliamentary decision and use outdated figures.
By the time old obligations are replaced with new ones and the withholding tax is eliminated, companies have long since repatriated their finance departments. The lost income is already replaced by new income. According to the message from the Federal Council (p. 42), the additional income potential of CHF 350 million can be realized in just five years.
The threatening scenarios of a one-time loss of billions are ultimately completely wrong: these are refunds that taxpayers are entitled to in any case, whether withholding is reformed or not. The federal government has long made provisions for this. The budget is not overloaded and the financial freedom of action is not restricted in any way.