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Cabinet aims to ease tax burden on families

The current tax system penalises married couples, with or without children Keystone

The government says that it wants to rapidly correct the tax discrimination that exists between married people and unmarried couples who live together.

This content was published on June 23, 2005 - 16:27

The move comes after Swiss voters overwhelmingly turned down a package including tax breaks last year.

In Switzerland, a husband and wife pay more in taxes than an unmarried couple who live together.

Under pressure after the rejection of the package, Finance Minister Hans-Rudolf Merz said that a new plan would be put forward in autumn.

"Immediate measures are needed," he told journalists in Bern on Thursday.

No precise details

Merz did not give precise details but said his officials were working on several models, one of which would be given priority.

He had promised such a move during the last session of the House of Representatives.

Whatever the new tax model chosen, the tax authorities are set to lose between SFr1.5 billion ($1.17 billion) and SFr2 billion, Merz said.

He warned that this would have to be made up either by spending less, reducing services or finding additional revenue.

The economy commission of the Senate is to discuss a report on Friday concerning how to reduce the fiscal inequality that married couples and families suffer.

Rapid action

Earlier this month, the House approved a motion calling for the imposition of individual taxation, whatever the civil status of the taxpayer, but since this risks taking years to introduce it also accepted a motion that called for rapid action.

In May last year, more than two-thirds of voters rejected a package of government proposals for tax breaks, pension reforms and a rise in Value Added Tax.

The outcome was seen as a blow to the government and parliament, which had put forward the proposals.

In a related development, the government on Thursday launched the second phase of its reform package for taxing companies.

The draft law aims at introducing measures in favour of small- and medium-sized enterprises, with a partial taxation of dividends foreseen.

It aims to complete tax reforms introduced in 1997, which aimed among other things at improving the tax situation for holding companies.

Merz said the measure was not aimed at simplifying the whole system of company taxation but finding a balance between the interests of business and those of public authorities.

swissinfo with agencies

In brief

The current direct taxation system penalises married couples, as the following example shows:

A man has a taxable income of SFr60,000 while his partner earns SFr40,000. If the couple are not married, the man pays taxes of SFr849 and the woman SFr284 – a total of SFr1,133.

If this same couple are married, they pay tax on their combined income of SFr100,000 – a total of SFr2,425.

That means the married couple pay the tax man SFr1,292 more.

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