Geneva rejects tax increases
Geneva rejects tax hikes
The Swiss authorities have recently taken new measures with regard to taxation. According to our information, Geneva's large fortunes are now exempt from the solidarity contribution. At the same time, the law on the taxation of real estate has been revised. Read on to find out more.
Large fortunes will no longer pay the solidarity contribution
It's now official. In Geneva, people with a fortune of more than 3 million Swiss francs will no longer pay the solidarity contribution. At least, that's what emerged from the ballot count at the end of a recent parliamentary vote on an initiative by the left and the unions.
If this law had been passed, it would have affected around 11,000 taxpayers. In addition, it would have enabled the State of Geneva to collect almost 200 million francs a year. For the other communes in French-speaking Switzerland, the law would have brought in 50 million a year over 10 years.
For the left, this sum would make it possible to meet the environmental and social needs that have been growing steadily in recent years.
Unfortunately, the right-wing opposed the bill, arguing that it would lead to an exodus of the most affluent, which would jeopardise the State's financial capacity.
A measure with a bitter taste
In a press release, the Fédération des Entreprises romandes (FER) in the canton of Geneva welcomed the outcome of the vote. The text was in fact aimed at considerably increasing the taxation of wealth. Yet Geneva is already the highest-taxed canton. In the eyes of the representatives of the right, SME owners would be the first to lose out.
For their part, the left and the unions see this as a major blow for the trust sector. Admittedly, this result leaves them with a bitter taste. But it should not be seen as a blank cheque to go ahead with tax cuts. This is what Tax Justice says in a press release published on its platform.
Property tax reform
In parallel with the measure taken in relation to the solidarity contribution, the public is in favour of the law on the tax valuation of properties. This is a law that the left fought in a referendum.
Originally, the law simply called for a 12% revaluation of the tax value of property held by owners who had lived in their homes for more than ten years. The idea was to bring them into line with the real value of their house or PPE.
But the right-wing majority in the Grand Council has added a whole series of measures by way of compensation. These include a 15% reduction in wealth tax. It should be noted that this measure is designed to apply to all assets, whether movable or immovable.
As a result, the State and communes will lose CHF 101.7 million in tax revenue. According to the Department of Finance, almost 80% of the revenue lost will benefit taxpayers with taxable assets of more than CHF 3.3 million.
After 95% of the ballots had been counted, it was clear that more than 50% of the people of the canton of Geneva had accepted the revision of the law on the tax valuation of real estate. The aim of the reform was to bring the law more into line with federal law.
In Switzerland, federal law stipulates that the tax valuation of properties should be as close as possible to their market value. So far, however, the canton of Geneva has struggled to make this adjustment. In this part of the country, most of the tax values of buildings and villas are lower than their market values.
To solve the problem, the reform proposes a temporary solution until the next property valuation. Pending the report of the expert commissions, a linear increase of 12% will be applied to current tax values. This measure will be followed by annual indexation to inflation, capped at 1%.
If the reactions are anything to go by, the PLR councillors are delighted with the result. A large number of them turned out at City Hall to give their impressions of the results. For Christophe Aumeunier, General Secretary of the Geneva Real Estate Chamber, this new measure will lift the canton of Geneva out of its current position as the worst tax jurisdiction in Switzerland for the wealthiest. He also congratulated the people of Geneva for recognising that property owners already pay too much tax. He also added that this law would help to restore the tax balance between old and new homeowners.
Socialist MP Caroline Marti has a different view. In her view, this measure perpetuates existing privileges while creating new problems of inequality. She believes that the big winners are those who hold company shares. According to her analysis, LEFI is contrary to federal law, which requires property to be taxed as closely as possible to its real value. It also foresees legal action by new owners who will feel they have been treated unfairly compared with the old owners.