When most people think of Switzerland, typically – mountains, lakes, chocolate, cheese and watches spring to mind. But there are other unique and special features for which Switzerland is famous, including its political system. At the core of Swiss politics is “Direct Democracy” which is underpinned by two instruments: initiatives and referendums.
Last weekend a nationwide referendum took place in Switzerland on some key issues, and in this short post, we look at that what those issues were and how the voting went.
1. AHV (State Old Age Pension)
The Swiss pension system consists of 3 pillars: the state (AHV) or pillar 1 and then, private pension schemes or pillar 2, finally – a 3rd pillar classified as the amount you save during your lifetime for retirement.
According to experts, the Swiss state pension system is at risk and requires increased funding of
CHF 18.5 billion over the next ten years to prevent it from collapse. Reforms hitherto proposed by Swiss parliament have been declined by the Swiss public in previous referendums.
The first two votes on the weekend concerned two aspects of reform regarding the State Pension or 1st Pillar:
- to raise the retirement age of women from 64 to 65.
- to raise the level(s) of VAT.
The results at the weekend showed that around 50.6% of voters came out in favour of raising the retirement age of women to 65, while 55.1% endorsed the second initiative to increase value added tax (VAT). In terms of rates – the standard VAT rate will now increase from 7.7% to 8.1%, while the reduced rate of 2.5% will increase to 2.6%. The special rate for accommodation will increase from 3.7% to 3.8%. This kicks in from 01. January 2024.
2. Factory Farming
Factory style farming – a truly hot topic globally at the moment, was also on the voting agenda last weekend. The Swiss government had opposed the proposal, arguing it would drive up prices and that Switzerland already has strict animal welfare laws as it is.
Swiss voters followed governmental advice and turned down the initiative with 63% of voters saying no – with canton Basel City being the only one of the 26 regions to approve the idea. According to reports published straight after the vote: “the initiative had demanded various improvements for farm animals, including guaranteed regular outdoor access and a reduction in the maximum numbers allowed in a single stable”.
3. Withholding Tax
The Swiss government currently levies a 35% withholding tax on income from financial investments, including dividends from stocks and other securities as well as bank accounts, but taxpayers can obtain a refund.
The initiative abolish the withholding tax was rejected by 52% vs 48%. They claim that only wealthy investors and a few major companies would be the main beneficiaries.
The Swiss Finance Minister Ueli Mauer expressed his disappointment at the result, saying it was missed opportunity to make Switzerland more attractive for inward investment.
Local issues across the 26 cantons and their districts were also voted on, from lowering the voting age to 16 (canton Bern, rejected) to free health insurance for minors (Basel City, rejected).
So all in all, it was a busy weekend for voters in Switzerland and again proof that “Direct Democracy” in Switzerland is alive and kicking and still forms an integral part of the Swiss political scene.
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