Political left forces vote on scrapping of withholding tax

Opponents of the reform argue that honest citizens will have to pay the price for the abolition of withholding tax on financial investments. © Keystone/Anthony Anex

Voters are likely to have the final say on abolishing withholding tax on bonds issued in Switzerland.

This content was published on April 5, 2022

Left-wing parties and trade unions said they had handed in the necessary number of signatures to the federal chancellery to challenge to a nationwide vote a decision by parliament last December.

The co-president of the Social Democratic Party, Cédric Wermuth, on Tuesday accused the political right of seeking tax breaks for major companies and rich individuals at the expense of ordinary citizens.

The shortfall in revenue would lead to a growing wealth gap and open the doors for tax cheats in Switzerland and abroad, opponents argue.

A majority of parliament approved the tax reform to strengthen the Swiss finance industry.

The government still has to set a date for the referendum.

Disputed shortfall 

Finance Minister Ueli Maurer said the shortfall – initially CHF1 billion ($1.08 billion) then CHF170 million annually – would be compensated in the long term.

However, opponents of the reform say supporters are downplaying the impact of the drop in revenue.

Under current law the Swiss government levies withholding taxExternal link on capital gains, lottery wins, life annuities, pensions and insurance benefits. The statutory rate of Swiss withholding tax is 35%.

The referendum is the latest in a series by the political left to oppose the government’s and parliament’s plans for tax reforms.

In February a majority of Swiss voters followed the left in rejecting plans for the abolition of stamp duty.

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