On November 27, the canton of Zurich will vote on whether the tax deductions for the health insurance company should at least correspond a little to the real costs.
the essentials in brief
- Zurich taxpayers are allowed to deduct health insurance costs from taxable income. The maximum deduction per adult, CHF 2,600 per year, no longer corresponds to the real costs for the health insurance company because the premiums have risen sharply.
- An initiative by the SVP is now demanding that the deductions be increased and that the amount of the deduction be regularly adjusted to the premium development.
- A counter-proposal by the cantonal council and the government council goes in the same direction, but provides for lower deductions. In addition, as before, the deduction should only be adjusted for general inflation.
- Both models reduce the tax bill for private taxpayers; in return, the tax revenue of the canton and the municipalities will also decrease.
- Voting is on November 27th.
With its justice initiative, the Zurich SVP wants to change the tax law. Private taxpayers should be allowed to make higher deductions for insurance premiums in their tax returns. The deduction is to be increased from CHF 2,600 to CHF 3,600 per person for adults and from CHF 1,300 to CHF 1,500 for children. As a result, the taxable income would be lower and so would the tax bill.
In addition, the amount of the deduction will in future be automatically adjusted to the development of the premium and no longer to general inflation, i.e. to the national index of consumer prices, as is the case today.
This system change is relevant because premiums have risen much faster than inflation. The differences are particularly striking in the long term: between 1999 and 2021 National index of consumer prices increased by 9.8 percent, while premiums more than doubled over the same period Figures from the Federal Statistical Office demonstrate.
If the initiative were approved, the tax revenues of the canton and the municipalities would each fall by around 150 million francs.
With their counter-proposal, the government and parliament also want to increase the deductions, but to a lesser extent. The deduction for adults should not be increased by CHF 1,000, but only by CHF 300, i.e. from CHF 2,600 to CHF 2,900 per year. When it comes to children’s premiums, nothing should change.
The calculation method should also remain the same: the amount of the deductions should be based on general inflation, as it is today, and not on the increase in the cost of health insurance premiums.
With this model, taxpayers would save around CHF 45 million each in cantonal and municipal taxes.
The initiators argue that medium-sized companies in particular will be hit hard by rising health insurance premiums. The burden is also greater in comparison to the neighboring cantons. If the initiative is accepted, taxpayers will have more money in their wallets. In addition, linking the deduction to the development of the premiums is future-proof because the deduction will increase accordingly if the premiums increase in the future.
The government and a majority of the cantonal council are primarily concerned about the tax shortfalls in the canton and the municipalities. These are not justifiable. In addition, it is not necessary to increase the deduction for child premiums. Health insurance for children now costs around 1,200 francs per year, so the child deduction of 1,300 francs already covers the real costs.
The opponents also criticize the proposed change in the calculation of deductions. Adjusting the tariffs to reflect the growth in average premiums makes budget planning more difficult for the canton and the municipalities.
The government and a majority of the Zurich cantonal parliament generally recognize that an increase in the deduction is appropriate. This is mainly because other cantons have already granted higher deductions and an increase in the deduction is also in the air for federal tax.
Compared to the maximum amounts in other cantons, an increase of CHF 300 per adult is appropriate. The Zurich tariff is also about the same level as the federal government in the future.
An annual tax loss of CHF 45 million each for the canton and the municipalities is financially acceptable.
After all, it would be clearer for the taxpayer if the deductions were also adjusted in the future after general inflation. In addition, this is easier for the budget planning of the canton and the municipalities.
In the cantonal council, a left-green minority fundamentally questioned an increase in deductions. She argues that the deductions mainly benefit high-income households, which could easily afford health insurance. The problem is not the deductions that are too low, but the rising health costs.
The CHF 45 million that the canton would lose as a result of the counter-proposal should therefore be better used for reducing premiums.
The voters will find out the initiative and the counter-proposal separately on their ballot paper. You can therefore reject both, accept both or agree to only one variant and reject the other.
If no variant receives a majority at the ballot box, the case is clear, as well as if only one of the two templates is accepted.
In the case of a double yes, however, the key question decides: the voters can indicate on their voting slip whether the initiative or the counter-proposal should be implemented in the event of a double vote. The variant that meets with greater approval in the tie-break wins.