Tax Proposal 17 - Part 5: Consideration of Cities and Municipalities, Increase of Minimum Requirements for Family Allowances, and Adjustments in Fiscal Equalization

In the last post, we explained why the cantonal share of the direct federal tax should be increased. Today we will discuss the position of the municipalities in this respect as well as the planned increase in family allowances and the changes in fiscal equalization.

Consideration of cities and municipalities

‍As we explained in the last post, the cantonal share of the direct federal tax is supposed to be increased. It goes without saying that cities and municipalities are also affected by the reduction in profit taxes. The alignment of equalization assistance occurs only at the cantonal level, but unlike with the USR III, they are supposed to – with the new Art. 196 Para. 1bis of the Federal Direct Tax Act (DBG) – consider their municipalities appropriately. However, this provision does not come with legal binding.

‍Increase in minimum requirements for family allowances

‍The legally prescribed minimum amounts of allowances for child and educational benefits are currently at 200 and 250 Fr. respectively. With the SV17, they are to be increased by 30 Fr. each. In the cantons of Fribourg, Zug, Vaud, Valais, Geneva, and Jura, nothing will change, as the allowances there are already at this level or higher. The legislature hopes that the planned increase will provide a socio-political balance, as companies benefit significantly from the entire Tax Proposal 17, thus giving more back to families.

‍Adjustments in fiscal equalization

‍As described in the Article 2, the elimination of the status of cantonal status companies would create a distorted picture in many cantons within the framework of cantonal resource equalization. Because in the calculation of the equalization, the profits of the status companies are currently considered less due to their low burden on Swiss infrastructure. If their status is discontinued, the corresponding Beta factor, which weighted the profits of the status companies in the equalization calculation, would also be discontinued, thus all profits of the status companies would flow fully into the calculation. The potential of cantons with many status companies would thus increase significantly, without corresponding economic growth having taken place. Therefore, with the SV17, so-called Zeta factors for all companies are to be introduced, which are intended to counteract this and keep the fiscal equalization stable. Which other measures are taken with the Tax Proposal 17, you will find out this Friday in the last part of our series.

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