The federal government is sticking to its plan to raise value-added tax (VAT) by 0.8 percentage points over ten years to finance the army, despite heavy criticism. The increase is intended to generate an additional CHF 31bn ($40bn) for defence and security.
To strengthen Switzerland’s security and defence capabilities, the government proposes to raise VAT gradually between 2028 and 2038. The proceeds would provide CHF 31bn for the armed forces and civilian federal agencies involved in security.
The extra revenue, along with part of the ordinary federal budget, would be channelled into a new armaments fund. All weapons purchases would be financed through this fund.
Limited political support
The fund would be allowed to borrow up to CHF 6bn to make advance payments, smooth peaks in spending and speed up procurement. Any borrowing would have to be repaid by the end of the temporary VAT increase, in line with Switzerland’s constitutional “debt brake”.
The plan requires an amendment to the constitution, a new law establishing the armaments fund and changes to the VAT law. A consultation period runs until the end of May, with a national referendum expected in the summer of 2027.
The proposal was presented in late January by the defence minister, Martin Pfister, and has drawn significant criticism. So far, only the Centre party has backed it.
More on this:
Government press release (in French) – Take a 5 minute French test now
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