Tax Collection - Barriers in the Federal Constitution

The fundamental principles of fiscal sovereignty guarantee a certain fairness of the state in the collection of taxes. They serve to protect the citizens. Violations of these principles can be challenged in the courts.

The basis of the Swiss tax system consists of the fundamental principles of fiscal sovereignty enshrined in the Federal Constitution (BV). Fiscal sovereignty refers to the legal and actual ability of the Confederation, cantons, and municipalities to levy taxes. A number of principles restrict this tax authority and set minimum standards that must be met when enacting tax laws.

Principle of Equal Rights(Art. 8 BV): The principle of equal rights must be observed when enacting (tax) laws. Equal rights are violated when laws or their application result in materially unjustified unequal treatment. The most important consequence of the principle of equal rights in relation to taxes is taxation according to economic performance.

Prohibition of Arbitrariness(Art. 9 BV): The prohibition of arbitrariness is intended to guarantee a minimum level of fairness in the state authorities' dealings with individuals. This command prohibits the enactment of irrational or senseless laws and the clearly arbitrary application of the law.

Principle of Religious and Conscience Freedom(Art. 15 BV): Do you pay church taxes? Or have you perhaps left the church community because of these taxes? – Then you have already encountered the principle of religious and conscience freedom. This principle results in the fact that only those who belong to a particular religious community are required to pay taxes to it. Those without a confession do not have to pay church taxes.

Principle of Economic Freedom(Art. 27 BV): Tax regulations must not impair economic freedom. For example, cantons are prohibited from introducing special business taxes. It is generally forbidden for the state to influence free competition in the market. The imposition of a special tax would disadvantage companies located in the affected canton compared to firms from other cantons.

Principle of Property Guarantee(Art. 26 BV): The principle of property guarantee prohibits the introduction of so-called "confiscatory taxation". This is when the tax reduces the substance of wealth or prevents the formation of new wealth.

Prohibition of Inter-Cantonal Double Taxation(Art. 127 Abs. 3 BV): This principle states that a person cannot be taxed on the same tax object, in the same period, in multiple cantons at once. For instance, a person does not have to pay taxes on their income simultaneously in the canton of Zurich and the canton of St. Gallen. The BV also allows the Confederation to take measures against this inter-cantonal double taxation. However, there is not yet a law on this, but a comprehensive jurisprudence of the Federal Court.

Prohibition of Unjustified Tax Advantages(Art. 129 Abs. 3 BV): The cantons are in constant competition and have an incentive to set their taxes lower than other cantons. This increases the likelihood that wealthy individuals and companies (from abroad) will settle in the canton. The prohibition of unjustified tax advantages is meant to ensure that cantons do not offer unjustified benefits to attract taxpayers. However, the Confederation has not yet had to intervene, because the cantons have created the "Concordat on the Exclusion of Tax Agreements".

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