YES to tax cuts for small/medium enterprises, NO to noise-related constraints to the air force

Swiss voters adopted in a Blockbuster referendum vote last Sunday a tax cut package (called the "Corporate Tax Reform II"; the German short form being USTR II) to foster small and medium-sized enterprises (SME). The outcome was extremely tight, with a majority margin of roughly 20'000 votes. The referendum was taken by the left after the federal parliament passed the USTR II last year.

The second federal issue, a popular initiative put forward by environmentalists to ban air force flights from touristic regions, was rejected harshly. The jungfreisinnige schweiz (Young Liberals of Switzerland, jfs) are satisfied with the outcome.

Swiss voters finally adopted the "Corporate Tax Reform II" (USTR II) by a 50.5% majority after a hot debate in the debate leading to the popular vote. The turnout was low with 38.2% even for Swiss relations. Polls in January showed a clear majority for the issue; however, corporate scandals and write-downs due to international financial crisis, the German authorities assault on Liechtenstein's tax laws as well as boni/perks and attitudes of prominent managers seem to have contributed to the very tight outcome of the referendum.

USTR II consists of many technical changes in laws to foster SMEs. One of the goals was to cut the "double taxation of profits and dividends. However, some provisions (among them a particular 10%-threshold) sparked controversies which the left tried to exploit by raising envy against entrepreneurs.

The ministry of finance announced plans for further tax reforms. A reform proposal was launched in mid-January for the Value Added Tax (VAT) – which has one of the lowest rates in Europe – with features such as a single comprehensive tax rate of 6.1% (currently, the main VAT rate is 7.6%, however, there are special rates) and many administrative simplifications. A second reform issue is the comprehensive approach to be taken by Cantons and the federal government to address the EU-Swiss tax dispute (in which the EU – in our view unjustly – claims some Swiss Cantonal corporate tax provisions as distorting the competition). The general direction here is again to lower all rates in order to counter the critique from Brussels. Switzerland considers the issue as non-negotiable since there are no treaties between the EU and Switzerland on taxes.

A third idea is currently pushed by the business association economiesuisse to cut profit taxes.

The USTR II is seen to increase the competitiveness of SMEs and help find succession in many firms. The Young Liberals of Switzerland supported the tax reform and are satisfied with the outcome. We consider it as beneficial for the creation and maintenance of jobs. The adoption of the reform is another milestone in the successful policies of our finance minister Merz. Further, the reforms strengthens entrepreneurial spirit and does away with impediments particularly for young entrepreneurs.

The second issue was an "initiative against fighterjet noise" of environmentalists to ban air force flights over territory that could be used touristically. Due to its possibly comprehensive meaning, the initiative was widely seen as dangerous for the maintenance of the air force. Voters rejected the proposal with a 68.1% majority as well as all Cantons. The bill would effectively have abolished any training opportunity of the air force at home and thus would have been a step towards abolishing the whole army, which was part of earlier bills by the left and greens.

The Young Liberals of Switzerland have fought against the initiative and are convinced that the noise problem could be addressed with better methods. After the vote the defense ministers assured that the army will consider changes to training schedules.

Contact for additional information:

Adrian Ineichen, International Officer jfs

0041 76 309 09 65

Links:

http://www.swissinfo.ch/eng/politics/internal_affairs/Photo_finish_decides_vote_on_company_tax_cuts.html?siteSect=1511&sid=8776822&cKey=1203878198000&ty=st

(In English, federal broadcast service)

http://www.nzz.ch/nachrichten/schweiz/unternehmenssteuerreform_abstimmung_resultate_1.677505.html

(in German, liberal newspaper NZZ)

www.jungfreisinnige.ch