In brief

  •  

    Lump-sum taxation has its origins in the Canton of Vaud, in 1862.  It was introduced in Geneva in 1928, and has existed at a federal level since 1934.

    For many years, this form of taxation was governed by the first article of the “Concordat du 10 décembre 1948 entre les cantons et la Confédération suisse sur l’interdiction des arrangements fiscaux”, and did not exist in all cantons.

    Since 14 December 1990, lump-sum taxation has been governed, as regards direct federal taxation, by article 14 of the Federal Act of 14 December 1990 on Direct Federal Taxation (DFTA). From the same date, article 6 of the Federal Act of 14 December 1990 on the Harmonisation of Direct Taxation at Cantonal and Communal Levels (DTHA) has fixed the conditions to which cantons must hold lump-sum taxation in their legislation.

    On 8 February 2009, the citizens of Zurich passed a referendum abolishing lump-sum taxation with a majority of 52.9%.  The three main effects of this referendum were:

    a) During the years that followed, numerous initiatives aiming to abolish or reform lump-sum taxation were submitted to either the public or to parliament in a number of cantons. With the exception of  Appenzell Ausserrhoden, Basel-Landschaft, Basel-Stadt, and Schaffhausen, which decided to abolish this form of taxation, all other cantons decided to retain lump-sum taxation, generally toughening the conditions applied to it.

  • b) In order to ensure that individual cantons did not impose excessively low tax rates, and to discourage the success of  the initiative mentioned below, the federal parliament used the Federal Act of 28 September 2012 on Lump-Sum Taxation (Loi fédérale du 28 septembre 2012 sur l’imposition d’après la dépense) to amend the aforementioned articles 14 DFTA and 6 DTHA, toughening the conditions imposed on lump-sum taxation. The principle amendments concern the introduction at federal level of a minimum threshold of expenditure, the requirement that cantons establish such a threshold within their own legislation, an increase of the minimum expenditure threshold from five to seven times the rental value of a property, and the requirement that cantons tax wealth by a method of their own choosing. These amendments will be applicable from 1 January 2016 to all parties paying lump-sum tax. However, persons already within the system by 31 December 2015 will continue under the previous conditions until 31 December 2020.

    c) Finally, on 30 November 2014 the Swiss public was called to vote on an initiative entitled “End tax breaks for millionaires (Abolition of lump-sum taxation)”. Following a campaign in which Philippe Kenel was heavily involved, voters rejected the initiative by a majority of 59.2%. After  many years in which the prospect of this initiative seemed to undermine the future of lump-sum taxation, the uncontested verdict of the Swiss public has now carved it into stone.

Cantonal initiatives

  •  

    The canton of Zurich was the first to abolish lump-sum taxation in a referendum on 8 February 2009.

     Following this decision, nine other cantons voted on an initiative aiming to abolish lump-sum taxation. Three passed the initiative (Appenzell Ausserrhoden, Basel-Landschaft and Schaffhausen) while five others rejected it (Bern, Geneva, Lucerne, St. Gallen and Thurgau).

     Furthermore, the parliament of the canton of Basel-Landschaft decided to abolish lump-sum taxation, while the Landsgemeinden (or parliaments) in four other cantons (Appenzell Innerrhoden, Glarus, Nidwalden and Ticino) decided in its favour.

    Zurich was the first canton to abolish lump-sum taxation. On 8 February its citizens voted by a majority of 52.9% in favour of an initiative aiming to do away with this type of taxation. In 2008 there were 201 lump-sum taxpayers resident in the canton.

    Following this decision, the citizens, Landsgemeinde or parliaments of various cantons have had the opportunity to give their verdicts on initiatives in favour of lump-sum taxation, as well as on counter-proposals to these initiatives.

    These are outlined below, in chronological order of the date on which the referendum, or the decision by the Landsgemeinde or cantonal parliament, took place.

     

    1. Glarus

    Following an initiative calling for the abolition of lump-sum taxation, the Canton Glarus Landsgemeinde decided on 1 May 2011 to retain this form of taxation.

    There were no more than five lump-sum taxpayers resident in Glarus in 2010.

     

    2. Thurgau

    On 15 May 2011, the citizens of Thurgau gave their verdict on an initiative that aimed to abolish lump-sum taxation.  They were also called upon to decide on a counter-proposal which would see the minimum threshold for expenditure raised to CHF 150,000. However, the counter-proposal also stated that the total expenditure should not be less than ten times the rental value of the property rented or owned by the taxpayer, or four times the value of the taxpayer’s pension.

    The citizens of Thurgau decided in favour of the counter-proposal.

    In 2010 there were 127 lump-sum taxpayers resident in the canton.

     

    3. Schaffhausen

    On 25 September 2011,  the citizens of Shaffhausen gave their decision on an initiative that aimed to abolish lump-sum taxation. A counter-proposal was put forward to introduce the same conditions imposed by the  Federal Act of 28 September 2012 on Lump-Sum Taxation at a cantonal level. This would mean that the level of taxable expenditure would be set at a minimum of CHF 400,000, and seven, rather than five times, the rental value of a property. It should be noted that at this point the Federal Assembly had yet to vote on the Federal Act on Lump-Sum Taxation.

    Shaffhausen decided in favour of the initiative and against the counter-proposal.

    In 2010 there were only seven lump-sum taxpayers in the Canton of Shaffhausen.

     

    4. Aargau

    On 6 September 2011, the Aargau Cantonal Parliament rejected a socialist motion to abolish lump-sum taxation.

    In 2010 there were 14 lump-sum taxpayers in the canton.

     

    5. St. Gallen

    On 27 November 2011, St. Gallen decided on an initiative that aimed to abolish lump-sum taxation. A counter-proposal suggested that the level of expenditure should be set at a minimum of CHF 600,000, and should not be less than seven times the rental value of the property occupied by the taxpayer.

    Both the initiative and counter-proposal were accepted. Nevertheless, on the question of which of the two would be favoured in such a situation, the counter-proposal won the majority of votes.

    In 2010 there were 87 lump-sum taxpayers resident in the canton of St. Gallen.

  • 6. Lucerne

    On 11 March 2012, Lucerne voted on an initiative aiming to abolish lump-sum taxation. A counter-proposal put forward the same system that was accepted in St. Gallen on 27 November 2011. Furthermore, the counter-proposal stipulated that the minimum level of taxable wealth should be equivalent to at least twenty times the level of expenditure.  This means that the minimum level of taxable wealth would be CHF 12 million.

    Lucerne decided against the initiative and in favour of the counter-proposal.

    In 2012 there were 130 lump-sum taxpayers resident in the canton of Lucerne.

     

    7. Appenzell Ausserrhoden

    On the same day as the vote in Lucerne, the citizens of Appenzell Ausserrhoden accepted an initiative calling for the abolition of lump-sum taxation. They rejected a counter-proposal which was identical in content to the one submitted in Lucerne.

    In 2012 there were only 19 lump-sum taxpayers resident in Appenzell Ausserrhoden.

     

    8. Basel-Stadt

    On 19 September 2012, the parliament of the canton of Basel-Stadt decided to abolish lump-sum taxation.  As the decision was made by parliament, it was never put to a popular vote.

    In 2012 there were 16 lump-sum taxpayers resident in the canton.

     

    9. Bern

    On 23 September2012, the residents of Bern voted on an initiative aiming to abolish lump-sum taxation, and a counter-proposal which exactly matched the Federal Act of 28 September 2012 on Lump-Sum Taxation. It should be noted that the Bernese counter-proposal, unlike the one submitted on 11 March 2012 in the cantons of Appenzell Ausserrhoden and Lucerne, did not stipulate a minimum level of taxable wealth.

    Bern decided against the initiative and in favour of the counter-proposal.

    In 2012 there were 211 lump-sum taxpayers resident in the canton.

     

    10. Basel-Landschaft

    On  23 September 2012, the same day as the vote in Bern, Basel-Landschaft voted on an initiative aiming to abolish lump-sum taxation, and on a counter-proposal featuring the same regulations as the Federal Act of 28 September 2012 on Lump-Sum Taxation.

    The canton decided in favour of the initiative and against the counter-proposal.

    In 2012 there were only 10 lump-sum taxpayers resident in the canton of Basel-Landschaft.

     

    11. Nidwalden

    On 3 March 2013,  the citizens of Nidwalden rejected an initiative that sought to abolish lump-sum taxation. It should be noted that the Nidwalden Cantonal Parliament had toughened conditions imposed on the tax in 2011. A minimum level of expenditure was set at CHF 400,000, whilst the minimum level of taxable wealth was fixed at CHF 8 million.

    In 2012 there were 84 lump-sum taxpayers resident in the canton.

     

    12. Appenzell Innerrhoden

    On 27 April 2014, Canton Appenzell Innerrhoden’s Landsgemeinde confirmed that it would retain lump-sum taxation, but that the minimum level of taxable expenditure would be raised to CHF 400,000.

    In 2012 there were 21 lump-sum taxpayers resident in the canton.

     

    13. Ticino

    On 6 May 2014, Ticino’s cantonal parliament rejected an initiative seeking to abolish Lump-Sum Taxation.

    There were 877 Lump-Sum Taxpayers living in Ticino in 2012.

     

    14. Geneva

    On 30 November 2014 the citizens of the canton of Geneva rejected an initiative seeking to abolish lump-sum taxation by a majority of 68.4%.

    In 2014 there were 696 lump-sum taxpayers resident in the canton.

    The canton also rejected a counter-proposal which called for a minimum legal level of expenditure of CHF 600,000, and that to cover wealth tax, the level of expenditure should be raised by 10%

    Furthermore, it should be noted that in the canton of Vaud, the Swiss Workers’ Party launched an initiative in 2010 which sought to abolish Lump-Sum Taxation.  They were, however, unable to collect the 12,000 signatures required to bring the initiative forward.

Federal popular initiative

  •  

    Federal Popular Initiative, “End tax breaks for millionaires (Abolition of lump-sum taxation)”

    On 30 November 2014 the Swiss public voted on an initiative launched by the left, entitled “End tax breaks for millionaires (Abolition of lump-sum taxation)”. It was rejected by a majority of 59.2%. Of the 26 cantons, only Schaffhausen accepted the initiative. Despite the claims of its creators, the scope of this initiative was not limited to lump-sum taxation. In fact, it aimed to do away with all of the tax privileges accorded to natural persons.

    The content of the initiative, which sought to introduce articles 127 paragraph 2 bis and 197 No 9 into the Federal Constitution (Cst.), can be summed up in three points.

    Firstly, the initiators wanted  tax privileges accorded to natural persons to be considered unlawful (art. 127 paragraph 2 bis Cst.). Secondly, they aimed to prohibit lump-sum taxation (127 paragraph 2 bis Cst.). Finally, they stipulated that should the initiative be passed, the Confederation must order that the legislation be implemented within three years of the date of the referendum.  If there had been no implementation act within the stated time period, the two pieces of legislation mentioned above, which would have been included in article 127 paragraph 2 bis Cst., would have been directly applied (art. 197 No 9 Cst.).

    In light of the above, it is clear that the initiative’s objectives were much broader in scope than the abolition of lump-sum taxation. Its creators aimed to abolish all tax privileges for natural persons, with lump-sum taxation, in their opinion, simply an individual example of this principle.

    The unlawfulness of tax privileges

    In a message published in the Federal Gazette (2013, p. 4853), the Federal Council noted that the potential scope of this provision raised questions. Nevertheless, it decided that the scope of the first sentence of the initiative did not extend beyond article 127 paragraph 2 of the Federal Constitution (Cst.) or the principle of equal treatment.

  • Personally, we do not share this position, for the following reasons:

    a. If this were the case, the authors would not have included it in the text of their initiative.

    b. Article 127 paragraph 2 Cst. states that: “Provided the nature of the tax permits it, the principles of universality and uniformity of taxation as well as the principle of taxation according to ability to pay are applied.” It should be noted that article 127 paragraph 2 Cst. did not feature in the draft constitution that was drawn up by the Federal Council. It was added by the National Council, and endorsed by the Council of States on the condition that the words “Provided the nature of the tax permits it” were added. However, paragraph 2 bis, as it was drafted by the initiative’s authors, does not entail this restriction, and as a result would have a broader field of application than paragraph 2.

    c. The fact that the authors of the initiative expressly stipulated that the Confederation should decree that the legislation be implemented within three years of the date of the vote is proof that they aimed to go beyond article 127 paragraph 2 Cst. and the abolition of lump-sum taxation. If the new article, 127 paragraph 2 bis Cst., had not been intended to go beyond the scope of article 127 paragraph 2 Cst., and was indeed limited to the abolition of lump-sum taxation, it would not have been necessary to require an implementation act.

    It follows from this that the first sentence of article 127 paragraph 2 bis Cst. would have caused considerable insecurity in the Swiss taxation system. Firstly, the authors of the initiative and their supporters would have attempted to introduce all manner of regulations during the drafting of the implementation act. From a legislative point of view, this would have destabilised the Swiss taxation system. Secondly, it would frequently have been necessary to turn to the Federal Supreme Court regarding the interpretation of the concept of “tax privilege”. It should be emphasised that, as is the case for article 127 paragraph 2 Cst., paragraph 2 bis would have applied not only to federal legislation, but also to cantonal legislation.

  •  

    Voter oui = déstabiliser le système fiscal suisse et supprimer les déductions fiscales, ce qui concerne tous les Suisses et tous les cantons

    Comme nous l’avons mentionné ci-dessus, cette initiative n’a pas comme objectif principal d’abolir l’impôt d’après la dépense. Son but essentiel, comme d’ailleurs l’indique son titre, est d’interdire les « privilèges fiscaux » pour les personnes physiques. Or, comme nous l’avons présenté, l’introduction de ce concept en droit suisse aurait comme conséquence de déstabiliser le système fiscal helvétique et de créer une totale insécurité à l'heure où la Suisse a justement besoin de retrouver ces conditions cadres stables. D'ailleurs, dans son discours du 28 juin 2014, le président du parti socialiste suisse a clairement déclaré que le but de son parti est la suppression des déductions fiscales.

    Vu l’objet de l’initiative, il serait totalement erroné de considérer qu’elle concerne uniquement les cantons romands et celui du Tessin où se trouve la grande majorité des personnes imposées d’après la dépense. L’introduction de la notion de « privilège fiscal » dans l’ordre juridique suisse serait déstabilisante dans l’entier de la Suisse aussi bien sur le plan fédéral, cantonal que communal.

    Next...