(Bloomberg) — The Swiss government has proposed raising consumption tax by 0.7 percentage points starting in 2026 to pay for pension increases, winning support from voters in a referendum earlier this year.
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The administration said in a statement Wednesday that the change, which must be approved by Congress and approved in a referendum, would increase the general tax rate from 8.1% to 8.8%.
Hotel consumption tax will be reduced from 3.8% to 4.2%, and consumption tax on essential goods will be gradually increased from 2.6% to 2.8%. The increase will take effect from January 2026.
Swiss voters in March backed a proposal to introduce a 13th annual benefit for pensioners. This is the first time in the country’s history that social security has been increased through a referendum. The government said it would support raising the consumption tax rate, Europe’s lowest, rather than raising wage contributions to fund the changes.
Separately, the government announced on Wednesday that it would cut the amount of goods shoppers can bring into Switzerland without paying duty from neighboring countries such as France, Germany, Italy and Austria.
The daily tax-free limit on imported goods such as food will be halved from 300 francs to 150 francs ($174) per person, the government said.
The changes do not require parliamentary approval and will take effect from January 1.
Swiss consumers pay some of the highest food prices in Europe, and a tariff system designed to protect the agricultural industry effectively shuts out cheaper imports. This makes cross-border shopping in landlocked countries attractive to many people.
(Updates figures starting in 3rd and 6th paragraphs.)
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