Interior Minister Pascal Couchepin has warned that rejection of a plan to shore up the disability insurance scheme will have serious consequences for social security.

Urs Geiser

Voters have the final word in September on a temporary increase of value added tax (VAT) to shore up the ailing disability insurance scheme.

Couchepin said the modest tax increase – an additional 0.4 per cent for seven years from 2010 – would not harm the purchasing power of consumers and slow economic growth.

"It means only an extra four francs in taxes on every thousand francs," he told a news conference on Tuesday.

Opening the government's campaign, he said the government had prepared no alternative solution in case of a "no" vote on September 27.

"There is no plan B. Pension cuts are not an option," Couchepin said.

The state-run disability scheme makes annual deficits of SFr1.4 billion ($1.3 billion) and has run up SFr13 billion in debts.

Initially the government set the vote for May, but it decided to postpone the ballot amid concerns by the business community and some politicians that the global economic crisis risked undermining the chances of approval.

"It is a crucial vote for our social security system. I'm confident that we can win it because we have convincing reasons. I count on parties, organisations and voters to act rationally," Couchepin said.

VAT is currently 7.6 per cent, with reduced rates for the hotel industry and for essential consumer goods.

Urs Geiser, swissinfo.ch

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