How does the future look under the JUSO initiative? 

On 30 November, we will vote on a popular initiative entitled “For a social climate policy – fairly financed through taxation (Initiative for a future)”. This may sound appealing in itself, but behind it is the latest JUSO idea that, while intended to enrich our country, would in fact impoverish it. 

It’s hard to image what a fortune of CHF 50 million or more looks like. We might try to picture some stacks of banknotes and perhaps a few gold bars. We could read Bilanz magazine’s special issue on Switzerland’s 300 richest people, which would tell us that most of these ultra-wealthy individuals are from the world of business – and indeed own their own company. 

Let’s take a company worth CHF 2 billion as an example. If its owner passes away or decides to gift the company while still alive, the new owners would be hit with a bill for almost CHF 1 billion. Where are they supposed to find that much money? In most cases, they would be forced to sell or liquidate either the whole company or at least part of it. As a result, thousands of jobs as well as lots of know-how, intellectual property and local pride would be lost from the region where it’s based, maybe moving abroad. This would also have an impact on the company’s suppliers and the local businesses that count its staff among their customers. 

None of those affected, of course, would simply stay in Switzerland and watch their life’s work or even that of several generations be destroyed. Should the initiative be passed into law, these people would leave the country. Many of them have already said as much. A study by Professor Marius Brülhart of the University of Lausanne, commissioned by the Federal Tax Administration, concludes that 77-93% of the relevant tax base would be shifted outside Switzerland. Instead of generating additional tax revenues of CHF 2.5-5 billion, the Federal Council estimates that the initiative could in fact result in a tax shortfall of CHF 2.8-3.5 billion a year. Who would plug this gap? Everyone who stays here. 

To stop this exodus from happening, the people behind the initiative have thought up measures to prevent tax avoidance that they had wished to apply retroactively from the date of the referendum. In its dispatch on the initiative (p. 24), however, the Federal Council made it clear that these measures couldn’t be applied retroactively and would only be applicable when the corresponding legislation enters into force, i.e. no more than three years after the referendum. It also ruled out introducing a tax on those leaving Switzerland because people can do so for reasons other than tax.  

The very existence of this initiative has already posed a challenge for Switzerland in terms of the predictability and appeal of its regulations for businesses. It would be for the best if the referendum on 30 November were to restore these advantages.