Alternative to higher value added tax Federal Council overturns billion-euro idea - everyone should pay in the end
According to experts, a new property gains tax at federal level could generate billions and would make more economic sense than higher VAT. But Finance Minister Karin Keller-Sutter blocked it.
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- Federal experts recommend a property gains tax instead of higher value-added or consumption taxes.
- Finance Minister Karin Keller-Sutter rejected the proposal despite high revenues.
- Cantons and the real estate industry warn of higher costs for developers and buyers.
A tax idea with great revenue potential is once again causing political debate. As the Tages-Anzeiger reported today, a group of experts appointed by the Federal Council recommended the introduction of a nationwide property gains tax over a year ago.
Finance Minister Karin Keller-Sutter nevertheless decided against it. Instead, the Federal Council wants to finance the rearmament of the army and the 13th AHV pension by increasing VAT. In addition, the capital withdrawal tax on payments from the second and third pillars is also to increase.
An increase in VAT will make consumer goods and services more expensive across the board - from food to everyday expenses. This is particularly noticeable for households with lower incomes, who have to spend a larger proportion of their budget on consumption.
Economists see alternatives. According to the expert group, a property gains tax could generate around one billion francs a year for the federal government - significantly more than the planned increase in capital gains tax.
Cantons oppose new levies
Experts argue that property gains are often due to location development and public investment rather than individual performance.
A recent example from the canton of Zurich shows just how politically sensitive interventions in real estate gains are. This winter, the cantonal government withdrew a proposal that the canton should receive 25 percent of municipal property gains tax in future.
The outcome of the consultation was clear: Practically all parties, 86 municipalities and their associations rejected the proposal. They argued that they themselves would have to make high infrastructure investments due to population growth. As a result, the cantonal government decided not to submit a proposal to the cantonal council at all.
Political conflict on the horizon
Despite the economic arguments, the chances of a federal solution are considered slim. Many members of parliament own property themselves, and the homeowners' association has strong political roots.
Nevertheless, SP Co-President Cédric Wermuth is calling for the Federal Council to examine a property gains tax and submit a proposal to parliament. Increases in the value of real estate are "almost always the result of the general development of a location and infrastructure upgrades", financed by the general public.
It remains to be seen whether the proposal will find a majority in parliament.
