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The federal government is loosening around 57 billion francs in the crown crisis, for emergency loans, short-term work, replacement work, childcare or tourist advertising. SVP Finance Minister Ueli Maurer (69) expects a deficit of 30 to 50 billion Swiss francs for this year, and years of need for adjustments.
No wonder, he announced at the crown session, squatting over the federal treasury. Now it is also closing the bulkheads with VAT. The Federal Council does not want to know anything about the VAT reduction for the economic sectors particularly affected by the Corona crisis. It rejects a corresponding motion by the member of the SVP Council of States Marco Chiesa (45, TI).
Ticino demanded from the Federal Council a package of measures for those sectors that have been in difficulties due to the coronavirus: the government has already done much about it.
Chiesa: “Stimulating internal demand”
But Chiesa also asked for a temporary VAT exemption or reduction for the most affected sectors. The standard rate is currently 7.7 percent; there are exceptions for basic needs such as food (2.5 percent) or hotel accommodation (3.7 percent).
“Our government can and should set an example from an economic and social point of view,” said Chiesa. It is unclear whether lower sales in the Corona months can be offset again. However, Ticino is convinced that thanks to a lower VAT, prices would also fall. And: “This could have a stimulating effect on domestic demand and the current turnover it suffers from.”
Going down means “first of all effort”
But the Federal Council currently has no hearing for this. Refers to the buffer measures already taken for the economy. “In selecting the measures, the Federal Council was guided by the principle that they should work quickly and specifically and be limited in time,” he wrote of Chiesa’s approach. If necessary, it would also “take more specific and effective support measures.”
VAT reduction is not one of them. Because: if sales decrease, less VAT should be charged. “The VAT relief is largely proportional to the drop in sales,” the government said.
Federal taxes are not very suitable as financial support. “A reduction in VAT can support consumption, provided consumers can consume it, or improve business margins,” said the Federal Council. Then comes the big but: “But first of all, it creates an effort for the companies involved, who have to adjust the tax rates.”
And a sector-specific cut in the hotel industry, for example, where a reduced VAT rate already exists, has “little potential to stimulate tourism demand.”
FDP wants to cut VAT in half
Even with the current Federal Council no, the VAT debate will continue to occupy the government. For example, the FDP Council of States, Damian Müller (35, LU) requires that VAT cut in half for twelve months. Or CVP’s national councilman Philipp Matthias Bregy (41, VS) would like to ease the wine industry with a cut in the value added tax.
