Why do the Swiss tolerate their politicians proposing VAT increases?

[Rebecca]

It seems increasingly often that I read of serious proposals by Swiss politicians to increase the VAT to pay for increased military spending and the new 13th AHV monthly payment.

Frankly I am astonished that Swiss voters tolerate this nonsense. The VAT tax is fundamentally regressive and punishes low and moderate income people while rich people do not even notice it.

It is shocking that Swiss politicians can seriously propose VAT increases while apparently not considering levying a capital gains tax on the sales of stocks.

I've discussed this topic with a few colleagues and have the general feeling that many Swiss people are not aware that their country belongs to the small minority in the world that does not charge a capital gains tax on stock sales.

While I benefit from a capital gains tax as an investor living in Switzerland, I recognize that this disproportionately benefits wealthy people and is unfair.

If the government really needs more money there seems to be alternative solutions rather than raising the VAT. I wouldn't like the ridiculous flat capital tax charged by Germany but do think that a progressive capital gain system like the one in the US is fair and reasonable. US capital gains tax rates are still significantly lower (0% for people with modest incomes) than wage income tax rates to incentive investing. With this system the US government collects billions of dollars in tax revenue while not overly favoring the wealthy. Yes the wealthy in the US still have lower tax rates than middle-class earners with only wage income but at least they are paying some taxes rather than nothing.

I know that someone will respond and mention that Swiss cantons assess a wealth tax on total assets. However, wealth taxes are very low, generally 1% or less. But I guess Swiss politicians don't want to inconvenience the rich so they would prefer instead to screw over everyone else with an increased regressive VAT tax.

 

[gaijin]

If my memory serves me right, all proposed VAT increases have been accepted in votes or referendums. So the people support this way of raising money. Why change to a system with completely unknown chances of success?

 

[Rebecca]

A capital gains tax system's chances of success could be easily projected. All stock sales are required to be reported on tax returns. It should not be difficult to conduct a study and estimate projected tax revenue with various rates of capital gains taxes.

I'm surprised that voters have voluntarily agreed to raise the VAT as it a regressive tax system and fundamentally unfair.

I suspect that voters approved of VAT increases because there is a widespread lack of awareness that there are other fairer systems of collecting revenue such as progressive capital gains tax. When I've discussed this issue with Swiss people they sometimes seem unaware of the lack of a capital gains tax, perhaps because the rate of people investing in stocks is relatively low. According to this website less than half of the Swiss own individual stock shares or ETFs.

 

[gaijin]

It should not be difficult to conduct a study and estimate projected tax revenue with various rates of capital gains taxes.

I agree that it would be easy to conduct such a stay. This could be one of the first steps in the political process. Expect at least two years to have a proposal ready for a vote. Unfortunately the new money is needed in less than two years to pay for all the upcoming expenses.

I suspect that voters approved of VAT increases because there is a widespread lack of awareness that there are other fairer systems of collecting revenue such as progressive capital gains tax.

Which would make it even harder to explain to voters why a new system could be a better idea than VAT.