The Swiss Federal Council on Wednesday approved a decree on a temporary increase in the value-added tax (VAT) by 0.5 percentage points. This was announced by the Federal Council’s press service.
The increase will apply to the standard VAT rate and remain in force for 12 years, starting in 2028. The additional tax revenue — approximately 24 billion Swiss francs — is to be fully allocated to priority military spending. The funds will cover rising prices in the armaments sector, the development of the army’s defence capabilities (including protection against long-range and hybrid threats), and the possible acquisition of a second long-range ground-based air defence system.
Initially, the government had considered a larger increase of 0.8 percentage points over 10 years. Following criticism during the public consultation process, the parameters were adjusted: the standard rate will rise by 0.5 percentage points, the special rate (for the hotel sector) by 0.3 percentage points, while the reduced rate on food and medicines will remain unchanged. This is intended to ease the burden on the population and the economy, particularly on low-income households.
The document has now been forwarded to parliament. If approved, the matter will be put to a referendum, with a vote possible no earlier than June 2027. Several parties have already announced their opposition to the proposal.