Large corporations will have to pay higher taxes in the future. This primarily affects Zug and Basel. At first it was said that they should keep the additional income. Now a red-green center alliance wants to take most of them away.
At the behest of the OECD, corporations like Roche have to pay higher taxes in Switzerland too.
Distributing money is one of the core competencies of politics. At the moment, however, the Federal Parliament is practicing a form of escalation: there is a dispute about the distribution of funds from which no one knows whether they will actually flow. What is meant is the additional revenue that the global minimum tax for large corporations will – hopefully – bring to the tax authorities.
Switzerland must adopt the requirements of the OECD countries if it does not want to lose tax base to other countries. The federal government vaguely estimates the short-term effects at CHF 1 to 2.5 billion per year. There are no figures on the medium-term consequences.
Nevertheless, the distribution battle is running at full speed. On Wednesday, the centre-left camp in Parliament was able to report a spectacular success: the Economic Commission of the National Council spoke out in favor of distributing the additional income much more evenly across the country than planned. Half should go directly to the federal government. The other half should remain with the respective cantons in which the companies concerned are based – with one important restriction: no canton may receive more than 400 francs per inhabitant.
Suddenly only 50 instead of 180 million
Presumably only two cantons would be affected by this – these are all the more massive: Basel-Stadt and Zug. There are a particularly large number of companies at both locations that would have to pay higher taxes because of the new regime. From today’s perspective, the canton of Zug, for example, expects additional income of CHF 200 to 400 million. According to the previous plan, three quarters of this would remain in the canton, the rest would go to the federal government.
Zug also has to pay more into the financial equalization (NFA) because of the whole exercise. If you deduct this, the canton could expect an amount in the order of 180 million. But with the 400-franc cap from Bern, it would only be 50 million.
Would that be bad? One thing is certain: the distribution of money is not an end in itself. The goal is to use the additional income to keep Switzerland attractive as a location for large corporations despite the imposed tax increase. There are many ideas: expanding research funding, more childcare places, tax cuts for private individuals, more money for universities.
«Where has the factual political mind gone?»
The Zug finance director Heinz Tännler doesn’t even try to hide his anger. “When I see such decisions, I ask myself where the factual political mind has gone.” It contradicts all logic to take away the majority of the additional income from the cantons most affected.
“It makes no sense to spread the money across Switzerland if we have a problem in a few locations – there it’s a massive one.” Tännler emphasizes that badly affected cantons such as Zug, Basel or Geneva must have sufficient funds so that they can compensate for locational disadvantages in a targeted manner. Otherwise, moves or relocations are to be expected, from which the whole of Switzerland will suffer.
Tännler emphasizes that the canton of Zug is already making “extreme” contributions – not only to the other cantons, but also to the federal government and the AHV. In the NFA alone, it will soon be more than 400 million francs a year. “We’ve learned to live with it. But solidarity is not a one-way street.” Tännler is now demanding something in return for the implementation of the new minimum tax.
“It would be completely wrong to set up another redistribution pot next to the NFA, into which we should pay another 50 to 60 million.” The Zuger also expects the governments of other cantons to oppose this plan. He does not give up hope that reason will prevail.
The middle pulls the strings
In order to avert the upper limit of 400 francs, Heinz Tännler will probably have to talk to another Zuger: National Councilor Gerhard Pfister, the middle president. It was his party colleagues who introduced the new proposal to the Economic Commission. “It must not be that two or three cantons have enormous additional income, while most of the others go practically empty-handed,” says Central National Councilor Leo Müller.
First, he argues with the tax competition, which his party absolutely wants to maintain: this is endangered in the medium term if the disparities between the cantons increase too much. Second, Leo Müller refers to the obligatory referendum on tax reform. “If people get the impression that Zug or other low-tax cantons can further reduce taxes for private individuals because of this proposal, there is a risk that they will vote no.”
The left is happy
The left can rejoice. With the 400-franc cap, the new plan is much closer to the red-green wishful thinking than to the proposal of the cantonal governments and the Federal Council. The SP co-president Cédric Wermuth says that from his point of view more money should flow to the federal government, but speaks of a “step towards a good compromise”. He leaves open whether his party would support the proposal in this form.
Is he serious – or a bluff? Could the left actually fight a bill that would raise taxes for big corporations? “Of course we welcome the minimum tax,” says Wermuth, “but that doesn’t mean that we support every variant of implementation.” If, for example, the cantons could keep most or even all of the additional income, this would lead to a “crass unfair distribution”.
Such a “Lex Zug” (Wermuth) could exacerbate tax competition to such an extent that it would be worse than temporarily not implementing the OECD reform. Wermuth does not deny that this would be bad. But in this case you just have to take a second attempt to get a better template.
The situation is uncomfortable for Basel
In addition to Zug, the canton of Basel-Stadt also clearly rejects the new proposal. His situation is tricky: the minimum tax should bring him more income. However, the OECD is still working on a second project that would only affect Basel and Vaud in this country: very large corporations such as Novartis or Nestlé should in future tax part of their profits directly in the sales markets.
If an international agreement is reached, Basel could suffer considerable losses. The canton is all the more insisting on the largest possible share of the minimum tax. There is not much time for lobbying, the parliament will decide in December.