Switzerland’s deficit — estimated at about 3 billion francs a year — is mostly due to additional spending on boosting up the army and state pensions.
To keep a tighter grip on its expenses, the Federal Council has set up a group of experts tasked with analysing the state of Swiss finances and proposing some cuts to achieve its goal of reducing the budget by at least 3 billion francs by 2027 and by at least 4 billion by 2030.
The group has presented over 60 measures that could considerably curb government spending, making it possible to save 4 to 5 billion francs per year.
These are some of the proposed measures that could, if approved, impact many households in Switzerland:
Social welfare
One idea is to scrap federal subsidies for childcare, leaving the funding of the scheme to each canton.
“Elimination of support for extra-familial childcare would have the most significant impact, resulting in savings of between 800 and 900 million francs a year,” the experts reported.
Pensions
The group proposed to abolish tax benefits for capital withdrawals under the second and third pillar-pensions.
This measure, which would reduce tax incentives to withdraw retirement capital, would generate an additional income for the federal government of about 200 million francs per year.
READ ALSO: What is Switzerland’s ‘third-pillar’ pension and how can it benefit you?
Public transport and road infrastructure
Financing of the railway infrastructure fund (BIF) and the national road and agglomeration transport fund (NAF) are to be reduced.
Projects that are not yet under construction would have to be ‘re-prioritised’: they would require a constitutional amendment with a mandatory referendum.
What is happening next?
Right now, these are just proposals put forth by the expert panel, and may or may not be implemented in the end.
The next step is for “all the measures proposed by the group of experts to be discussed with the cantons, political parties, and social partners during round tables,” the Federal Council said.
“Following the round tables, the Federal Council will decide which measures to adopt and submit to the ordinary consultation procedure. This will probably begin in January 2025,” the government noted.
Does all of this mean Switzerland is in financial trouble?
Not really.
In fact, it is on a more solid financial ground than most countries.
According to media reports, “despite the higher budget deficits, Switzerland’s government debt will still be low by international comparison, reaching 16.6 percent of GDP by 2028. This compares with 46 percent in Germany, 92 percent in France and far below the 101 percent level in Britain, according to data from the International Monetary Fund.”
READ ALSO: What is Switzerland’s debt brake and how does it affect residents?
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