MIL OSI Translation. Government of the Republic of France statements from French to English –
Source: Swiss Canton of Vaud – news in French
Press release from the Council of State
Published on September 24, 2024
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Tax strategy for individuals
The Council of State presented today its tax reform strategy intended to support, along with other measures, the purchasing power of the people of Vaud. This “Purchasing Power Plan” aims to redistribute nearly 270 million francs per year to the population by 2027 and represents nearly one billion francs cumulatively over the entire current legislature. It is part of the major balances constructed in the legislative program and constitutes one of the most ambitious cantonal tax reforms for individuals, comprising progressive and financially absorbable measures. This plan serves as an indirect counter-project to the popular initiative “Tax cuts for all: restoring purchasing power to the middle class” – deemed excessive – and which the Council of State opposes.
Since the beginning of the legislature, the Council of State has taken several measures to strengthen public benefits to the population that have a direct or indirect impact on purchasing power and improving the quality of life: pricing policy for mobility, professional training in the field of health and social policy. In this last area, family allowances will increase from 2025.
In a context where the financial outlook has deteriorated (inflation, successive crises, deterioration of federal finances), the Government wishes to maintain the major balances forged in its legislative programme and proposes to the Grand Council to reject the initiative for a 12% tax cut which, with an estimated impact of around half a billion francs per year in tax revenue reduction, would have too significant an effect on cantonal finances and services to the population. The attractiveness of a canton is not only measured by its taxation, but also by the range and quality of services provided to the population by its public services.
By presenting its Purchasing Power Plan, the Government is today making its fiscal commitments a reality. This plan has three ambitious objectives:
Firstly, reduce the tax burden on Vaud taxpayers; secondly, improve the tax attractiveness of the Canton of Vaud in order to attract new taxpayers; thirdly, guarantee the financing of public policies and services to the population.
The Purchasing Power Plan is made up of a series of measures, some of which have already been submitted to the Grand Council and others will be submitted shortly. Thus, nearly 270 million francs will be indirectly redistributed to the people of Vaud by 2027, or nearly one billion francs cumulatively over the entire current legislature. Specifically, the Council of State is proposing to the Grand Council a reform aimed at reducing income tax by a total of 5% and wealth tax by 5% by the end of the legislature. It also proposes raising tax thresholds and improving the framework conditions for inheritances and donations, in order to promote family inheritance and the transfer of businesses to direct descendants. These measures are in addition to the increase in the deduction for health insurance premiums, the deduction for childcare costs, and the reduction in the taxation of movable assets, all of which will come into force in 2023.
An amendment to the law on the effects of the tax shield is planned, as is, for companies, an amendment to the directive on the estimation of unlisted securities for the purposes of wealth tax (working tool).
In a long-term vision aimed at promoting purchasing power, the Council of State is also launching work to reform the tax scales on income and wealth, targeting the middle class, subject to the completion of individual taxation at the federal level.
The Purchasing Power Plan is ambitious and serves as an indirect counter-project to the popular initiative “Tax cuts for all: restoring purchasing power to the middle class” which the Council of State opposes. Indeed, while it shares the will and objective of the initiators to improve the purchasing power of the people of Vaud, the Council of State considers that progressive and financially absorbable measures are preferable. The Government considers that the initiative for a 12% tax cut would harm the balance of public finances if accepted, which is why it invites the Grand Council in its notice to reject it.
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EDITOR’S NOTE: This article is a translation. Apologies should the grammar and/or sentence structure not be perfect.