Although the Swiss Federal Parliament passed an individual taxation plan in June, the conflict is intensifying as the conservative camp seeks to maintain the system through a referendum.
According to the Financial Times (FT) on the 18th, under the current joint taxation system in Switzerland, high-income dual-income couples will be burdened with up to 40,000 Swiss francs per year compared to unmarried couples. As a result, more and more wealthy couples are delaying marriage registration or going on “tax divorce” and “fake marriage” to avoid tax. The Swiss Supreme Court ruled in 1984 that unequal taxation between married and unmarried people was unconstitutional, raising the need to improve the system.
The Federal Assembly narrowly passed a 101:95 plan to abolish joint taxation for dual-income couples and convert it to individual income-based taxation. The reform applies only to federal taxes, and the government said it expects about 60,000 additional labor market participation and a 1% increase in GDP. In particular, the key goal is to expand women’s participation in economic activities, which has been suppressed by marriage penalties.
However, the business community and the conservative camp are strongly protesting. The Swiss People’s Party (SVP), the Central Party, and evangelical parties criticized the loss of 1 billion Swiss francs (about 1.7204 trillion won) in tax revenue annually at the federal and state levels, calling it a bureaucratic monster that causes an increase in administrative burden and disadvantages for single-income households. They are pushing for a referendum by collecting 50,000 signatures within 100 days, and at least eight states can use constitutional provisions to force a referendum in case of failure.
Social changes supporting the need for institutional reform are clear. Over the past 20 years, Swiss women’s entry into society has expanded rapidly, and the current female employment rate exceeds 80%. Since winning the suffrage in 1971, Swiss women’s social status has improved significantly, but the proportion of regular workers remains at the lowest level in the OECD, which points out that institutional improvement is urgent.
In the past, similar reform proposals were rejected in a referendum in 2016, making it unclear whether the system will be changed.
JULIE KIM
US ASIA JOURNAL
