The Swiss Federal Council has officially proposed a temporary increase in the value added tax rate by 0.8 percentage points, from the current 8.1% to 8.9%. The additional revenue is to be used exclusively to strengthen the country’s defence capabilities and rearm the army.
According to the plan, the VAT increase should remain in effect for 10 years, starting in 2028. The government estimates that this measure will generate an additional 31 billion Swiss francs (approximately $40 billion) for a special armament and security fund. The funds will be used to purchase new weapons and ammunition, modernise the army’s infrastructure, and accelerate the build-up of defence capabilities.
Defence Minister Martin Pfister justified the initiative by citing the sharply deteriorating security situation in Europe, including Russia’s war against Ukraine, growing hybrid threats and uncertainty in transatlantic relations. According to him, the current level of military spending is already insufficient, and Switzerland must seriously strengthen its ability to defend itself.
The Federal Council’s proposal must be approved by parliament and will then, in all likelihood, be put to a nationwide referendum, as is customary in Switzerland for significant changes to tax legislation.
The final decision will be left to Swiss voters.