Switzerland is one a few countries that taxes wealth, a tax borne by a relatively small percentage of the population, due partly to thresholds and allowances.
On 18 June 2023, citizens in the canton of Geneva will vote on whether to boost the rate of wealth tax applied to assets above CHF 3 million over the next decade – an extra CHF 44 to 49 per 1,000 would be levied on wealth above CHF 3 million for 10 years.
The idea dates from the pandemic when government budgets were stretched and a section of society was struggling to make ends meet. The extra tax was presented as a solidarity tax. However, since Covid, the finances of Switzerland’s cantons have improved, sometimes significantly. In 2022, the canton of Geneva generated a surplus of CHF 727 million.
70% of Geneva’s population currently pays no wealth tax and a further 10% close to none. 70% of the tax is currently paid by the roughly 1.5% of the population with assets above CHF 5 million.
The concern with tax rises aimed at the wealthiest is that they encourage a few of them to leave. If a handful of billionaires leave it can have an outsized impact on government finances. A few such departures could easily reduce the tax take by more than the CHF 430 million extra tax some campaigners expect the plan to generate. The impact can be even greater at a municipal level where the number of tax payers is smaller – taxes are charged at federal, cantonal and municipal levels in Switzerland. Moving a few blocks can sometimes change how much tax is paid.
Geneva’s government and most of the main political parties are against the idea. Only the Socialist and Green Parties are in favour of the plan. On 18 June 2023, voters will decide.