Historic change of course Federal Councillor wants tax increase for army rearmament - and sparks major conflict in Bern

Using the security situation as a justification, the Federal Council wants to arm the army - and make the population pay. Now a fundamental debate on taxes, security and responsibility begins.

The Federal Council made a far-reaching decision on Wednesday: VAT is to be increased by 0.8 percentage points for a limited period of ten years from 2028 in order to finance the rearmament of the Swiss Armed Forces. In doing so, the national government wants to provide the army with an additional CHF 2.7 to 3 billion a year.

It is a decision with a signal effect - and a political first. This is because VAT, which was introduced in 1995 as the successor to the goods turnover tax, has in the past been expanded primarily for social services and infrastructure. Increases were used to finance the AHV, disability insurance and major transport policy projects such as the NRLA.

Major security policy projects have never been the focus of VAT increases to date. The fact that the army is now to be financed in this way marks a break with previous practice.

Army needs additional funds

According to the Federal Council, this has been triggered by the worsening geopolitical situation. The war in Ukraine, growing tensions between the major powers, new threats in cyber and air space and doubts about the reliability of international alliances are also putting Switzerland under pressure. The Federal Council argues that the army is no longer capable of defending itself in key areas and urgently needs additional funding for equipment, infrastructure and new capabilities. This feat of strength cannot be achieved without new revenue.

Politically, however, the decision is anything but a no-brainer. Parliament must first approve the VAT increase. Then the people have the final say: an increase in VAT is subject to a mandatory referendum. Voters will therefore decide at the ballot box whether they are prepared to dig deeper into their wallets for the security of the country.

The center backs its Federal Council

So far, only the Center Party is united behind the proposal. As the party of the responsible Federal Councillor Martin Pfister, it welcomes the VAT route. Party President Philipp Matthias Bregy puts it in a nutshell: with a VAT increase, "the population can decide whether they want to spend this money on their security or not". This is democratically "the right way". The center also argues with intergenerational justice: Either you pay today through higher revenues - or you shift the bill to future generations through debt.

The other parties have a completely different view, albeit for different reasons. The SVP vehemently rejects the tax increase. It emphasizes that Switzerland's security is a top priority and that the army needs sufficient resources. However, instead of "fleecing" the population, the Confederation should reprioritize its spending.

Criticism from the conservatives

In its statement, the SVP warns of an additional burden of around CHF 2.7 billion per year for households and draws parallels with the "temporary" military tax of 1940, which still exists today. It also links the debate with internal security and asylum and calls for this to be addressed first. The SVP is in favor of a higher defense budget, it writes in a press release, but "without an increase in VAT".

The FDP also says no to new taxes, although it recognizes the army's need for additional funding. Switzerland has been cutting its army to the bone for decades and now it needs to be upgraded quickly, but not at the expense of prosperity and competitiveness. Co-President Benjamin Mühlemann warns against "reflexively calling for new taxes" and doubts that the population would agree to an increase in VAT.

Instead, the FDP proposes alternative ways of financing - such as the partial sale of Swisscom shares while retaining the blocking minority or the use of National Bank profits. Member of the Council of States Josef Dittli emphasizes: "We urgently need to upgrade - without higher VAT."

Left-wing camp criticizes billions "into the F-35 black hole"

Criticism from the left has a different focus. The SP is "very skeptical" of Federal Councillor Pfister's plans. Co-President Cédric Wermuth says: "Additional army billions are not justifiable if the money is invested in the wrong place."

The SP is particularly annoyed by the adherence to the F-35 fighter jet project. This is not only a cost risk, as reports by the Swiss Federal Audit Office have shown, but also makes Switzerland dependent on the USA in terms of security policy. For the SP, one thing is clear: only a discontinuation of the F-35 procurement would create financial leeway.

The criticism from the Greens is even harsher. National Councillor Balthasar Glättli speaks of an "unacceptable VAT increase to finance the bourgeois armament mania". Instead of throwing billions "into the F-35 black hole", we need to invest in the future, for example in climate protection. The planned tax increase is antisocial and irresponsible, but at least offers the chance to stop the "armament mania" at the ballot box.

GLP calls for a "reality check"

The GLP, on the other hand, has positioned itself between the two fronts. It does not reject the plans in principle, but is subjecting them to a "reality check". National Councillor Beat Flach criticizes the fact that a bill is being presented before it is clear which specific services it will finance.

In addition, VAT is particularly sensitive in view of the burden already planned for the 13th AHV pension. At the same time, the GLP welcomes the fact that the Federal Council is taking a broader view of security - including cyber defense, protection of critical infrastructure and European cooperation.

The people have the last word

One thing is certain: The Federal Council's decision has triggered a fundamental debate. It not only touches on the issue of security, but also on the financing of the state, the setting of priorities and social compatibility.

The fact that VAT - previously an instrument for social and infrastructure policy - is now to be used to arm the army makes the debate even more explosive. In the end, it will not be parliament but the people who will decide whether this historic change of course is accepted.

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