Municipal finances Schaffhausen government wants to help financially weak municipalities

The Schaffhausen cantonal government has announced an adjustment to the cantonal financial equalization scheme. As an immediate measure, the municipalities are to receive a higher share of the direct federal tax. At the same time, the government is launching a total revision of the financial equalization system.

The government council is responding to pending initiatives in the cantonal council, among other things, with the immediate measure and the opening of a consultation on the amendment to the Financial Equalization Act, as President of the Government Patrick Strasser (SP) said at a media conference on Friday.

"The financial situation of the municipalities in the canton of Schaffhausen varies greatly," said Strasser. Some municipalities barely have the means to make even the most important investments. In other municipalities, particularly in the city of Schaffhausen, the recent changes to corporate taxes have led to significantly higher tax revenues. According to Strasser, the situation of financially weak municipalities must therefore be improved quickly.

To this end, the first step is to increase the share that the municipalities receive from direct federal tax. This involves a total of around CHF 8 million per year. Small municipalities are to benefit particularly strongly because the costs of basic services per capita are particularly high for them. This regulation is to be limited to five years. The cantonal council will next consider the bill.

During this time, cantonal financial equalization is to be realigned. Unlike in the past, the tax rate of a municipality will no longer play a role in calculating the amount of the equalization of resources and burdens.

New incentive system to be introduced

In addition, an incentive system is to be introduced that guarantees municipalities financial equalization payments over a certain period of time if they initially have a shortfall in revenue due to measures introduced to strengthen their tax capacity.

A further innovation is likely to cause discussion: the city of Schaffhausen is to lose its current central burden equalization of around CHF 3.7 million per year in financial equalization.

The cantonal government has opened the consultation process for the revision of the financial equalization system. After evaluating the feedback, it will prepare a draft for the Cantonal Council.