Pension deficit from ‘Baby Boomers’ prompts National Council to approve national referendum on VAT rise
An ageing population, and funding shortage in the public pension system (OASI), has led to the National Council and Council of States to approve a national referendum on increasing the VAT rates from January 2023 as follows:
- Standard rate from 7.7% to 8.1%;
- Reduced rate from 2.5% to 2.6%
- Hotel accommodation rate from 3.7% to 3.8%
Package of reforms triggers national referendum
Since the VAT rate change is linked to other measures to change the benefits package, and therefore a change to the Federal Constitution, a national referendum will be held to vote on the changes. This will happen at some time between 8 April 2022 and 7 April 2023.
The extra revenue would be applied to cover shortages on the Swiss Old Age Insurance contribution which falls short of the ongoing payments. This is being exacerbated by the wave of Baby Boomer generation (born between 1946 and 1964) now retiring.
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Second attempt to raise Swiss VAT to fund pensions
Back in 2017, the Swiss voted against a VAT rise to fund a pension reform package. The rate then was 8%, and the vote proposed 8.3%. So instead a planned cut to the current 7.7% went ahead on 1 January 2018.