Consultation on Tax Proposal 17 – Part 2: The Impacts

Since September 6, 2017, the three-month consultation period on Tax Proposal 17 has been underway. Following the rejection of Corporate Tax Reform III, this marks the next attempt. This reform is so important because the current corporate taxation is no longer contemporary and can negatively affect the attractiveness of the location. The first article addressed the adjustments that Tax Proposal 17 would bring. This second article is dedicated to the effects of Tax Proposal 17.

As was shown in the first article, a reform of corporate taxation is urgently necessary. Otherwise, this can have negative effects on the attractiveness of Switzerland as a location. This is to be prevented with Tax Proposal 17. Tax Proposal 17 itself will have strong financial impacts. According to the estimates of the Federal Council, the reform will burden the federal budget with 750 million francs. From 2024, a time-limited supplementary contribution for resource-poor cantons will also be due. This amounts to 180 million francs and is to be financed from the expiring hardship compensation.According to the announcement of the Federal Council, Tax Proposal 17 is very federalistic in design. The cantons are given leeway in the implementation and should thus choose the best strategy for themselves. This should also compensate for part of the expected revenue shortfalls at the cantonal level. At the same time, it is assumed that the cantons can expect 1.2 billion francs in additional revenues. 825 million of this comes from the increase in the cantonal share of the direct federal tax.The three-month consultation period will end on December 6, 2017. Subsequently, the FDF plans to present the message to the Federal Council to Parliament in spring 2018. Accordingly, it is possible for it to come into force at the earliest in 2020.

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