Don’t uncork the champagne just yet. Finance minister Eveline Widmer-Schlumpf this week outlined the Federal Council’s response to the popular initiative “Stop discriminatory VAT in the restaurant business”, to be put to the vote on 28 September.
For several reasons, she rejected the proposal of GastroSuisse, the hotel and restaurateurs association, to bring the standard 8% VAT in restaurants in line with the 2.5% rate for fast-food outlets and sandwich shops.
In its campaign posters, the hotel and restaurant association points to the unfairness of the current system, contrasting a fur-clad beauty against a mountain backdrop nonchalantly holding a sushi platter to eat on the go with a retired woman enjoying her morning coffee and croissant in a café, or a gold bedecked man spooning caviar into his mouth with a worker sitting down to the plat du jour in a restaurant at lunchtime. It also argues that it is inconsistent for the same dish – a salad, say – to be subject to such different value-added tax rates.
According to Widmer-Schlumpf, it is not logical to have the same VAT rate, as a restaurant offers far more than a takeaway establishment – tables and chairs, toilets, waiter service and ambience. GastroSuisse president Casimir Platzer maintains in 24 heures that this adds to restaurant owners’ costs and hence there is all the more reason to level to playing field. Furthermore, if restaurant VAT were reduced to 2.5%, the finance minister is not convinced any savings would be passed on to customers. According to her, the money could be used instead to increase margins or improve salaries, a suggestion that incensed Platzer.
A rate reduction would result in a tax revenue loss to the Confederation of around CHF 750 million, including CHF 75 million for the state pension fund (AVS) and CHF 40 million for invalidity benefit (AI). To make up for the shortfall, Widmer-Schlumpf suggested the lower rate 2.5% VAT on essential items, such as bread and milk, would have to be increased to 3.8% across the board. According to Platzer this is an over-literal interpretation of the text of the initiative, which talks about “food items” but is aimed at takeaway food outlets not shops.
Finally, Widmer-Schlumpf said the initiative, if passed, would favour wealthy citizens and be a burden on less well-off families who would see day-to-day expenses increase as a result of the higher basic VAT level. Platzer told 24 Heures that the social argument is erroneous. When VAT rates were fixed 20 years ago, restaurants were considered a luxury; now 2.5 million people a day eat in them, mostly at lunchtime.
The National Council rejected the initiative by 99 votes to 82 with 14 abstentions, as did the Council of States by 22 votes to 13 with 7 abstentions. Unsurprisingly the Federal Council and Parliament recommends voters to reject the initiative. Indeed almost all parties across the political spectrum are against the initiative – Socialist Party, Liberal Radical Party, Green Liberals and Evangelical People’s Party.