Effects on your wallet The Federal Council wants to dig deeper into your pocket again
The Federal Council is planning to increase VAT. If the proposal is implemented, this would have a direct impact on your wallet - especially for low-income households.
No time? blue News summarizes for you
- The Federal Council wants to increase VAT in Switzerland by 0.8 percentage points in order to better finance the army in the face of growing security risks.
- The increase would make everyday expenses more expensive, particularly noticeable for low-income households.
- An increase in VAT is considered politically more feasible than alternatives, but still has to pass through parliament and a referendum.
What has the Federal Council decided?
The Federal Council decided on Wednesday to increase VAT by 0.8 percentage points. The additional revenue will be used to finance the rearmament of the Swiss army. This is due to increasing security risks in Europe and higher financial requirements over several years.
How much will VAT increase in concrete terms?
The standard rate (see point 3) would rise from 8.1 percent today to 8.9 percent. The other two rates - the reduced rate and the special rate for accommodation - would also be increased accordingly. The increase applies not only to individual products, but across the board.
It was already known that the Federal Council wants to increase VAT by an additional 0.7 percent so that the 13th AHV pension can be paid. VAT could therefore rise from the current 8.1 percent to well over 9 percent.
What are the standard rate, reduced rate and special rate?
There are three levels of VAT in Switzerland:
- Standard rate: this applies to most goods and services, such as clothes, electronics, restaurant visits, streaming subscriptions and hairdressing appointments. (Currently at 8.1 percent)
- Reduced rate: This applies to everyday goods such as food, medicines, newspapers and public transport tickets. (Today at 2.6 percent)
- Special rate for accommodation: This applies specifically to hotel accommodation including breakfast and is intended to support tourism. (Today at 3.8 percent)
What does the increase mean for my everyday life?
In everyday life, this means that almost every purchase will be slightly more expensive. VAT is always charged where goods are consumed. You won't notice the increase in a single product, but in total over the year.
Here are a few specific examples, assuming all three VAT rates are increased by 0.8 percent:
- Weekly shopping for 200 francs: around 1.60 francs more
- Restaurant bill of 120 francs: just under 1 franc extra
- New smartphone for 1,000 francs: around 8 francs more
- Annual consumption of 30,000 francs: around 240 francs extra cost per person per year
The examples show: These are relatively small amounts - but they add up.
Who will feel the increase particularly badly?
Mainly households with a low income. They spend a large proportion of their income on consumption and can save less. Wealthier households invest or save more - and pay proportionately less VAT. But the basic rule is: everyone pays VAT.
Why is the Federal Council still relying on VAT?
Because it is politically easier to implement than other taxes. It burdens everyone equally and generates reliable revenue for the federal government. In addition, VAT in Switzerland is still low by international standards: in many EU countries it is 20 percent or more.
Are there areas that are less affected?
Yes, the reduced rate specifically protects basic needs. The price of food or medicines increases less than that of luxury or consumer goods. However, if all VAT rates were increased by 0.8 percentage points, the reduced rate would be affected more in percentage terms because it is the lowest.
Does the VAT increase drive inflation?
Yes, but only to a limited extent. Experts expect a one-off price surge, not a permanent rise in prices. Inflation in Switzerland is currently considered to be low and stable, which is why the National Bank considers the increase to be manageable.
Are there alternatives to value added tax?
Yes, such as an inheritance tax or a financial transaction tax. These would place a more targeted burden on high assets. However, such models are politically controversial and have so far failed to gain majority support - as demonstrated in November 2025 by the popular rejection of the Juso initiative, which called for a national 50 percent inheritance tax on assets of CHF 50 million or more.
A financial transaction tax, on the other hand, is aimed at taxes levied on trading in financial instruments such as shares, bonds or cryptocurrencies.
Conclusion: What does this mean for the population?
The army will receive more money - paid for by everyone. Not noticeably all at once, but a little with every purchase. VAT therefore remains the Confederation's most important financing instrument - and a silent but permanent cost factor for many households.
However, the Federal Council's decision will first be discussed in parliament. Apart from the center, the party of the responsible Federal Councillor Martin Pfister, all parties have expressed their opposition to a VAT increase. And the people would have the final say anyway: an increase in VAT is subject to a mandatory referendum.
