Three good reasons to abolish stamp duty on new issues

When the Swiss electorate votes on 13 February on abolishing an outdated form of taxation in order to strengthen its economy and financial centre, the result could be a close-run thing. There are some arguments against the proposal, but three examples show why the stamp duty on new issues of equity should be abolished.
Article byNicholas John

Anyone in the business world would agree that a strong economy means a strong Switzerland but it seems that left-leaning politicians still need some persuading. The referendum coming up on 13 February on reforming stamp duty represents an investment that will allow Switzerland to harness its potential as a business location more effectively. The three examples below show why the stamp duty on new issues of equity should be abolished.  

A piggy bank with a hole in the bottom

Do you remember getting regular pocket money from your parents or cash from Grandma on your birthday? It often went straight into a piggy bank to save “for a rainy day”. Imagine if you had had to give up five cents for every five francs you put in the slot. That is basically what many business owners in Switzerland have to do. When they invest their own savings into their company to help it grow, they pay 1% directly to the tax authority – without having earned so much as a single franc. If you share my view (as well as that of the Swiss Parliament and the Federal Council) that this makes no sense, then there is no need for you to read any further. Just reach for your voting papers and put your mark against “yes” to changing the stamp duty system.

If you are still not convinced, I have two more arguments.

It is not fair to place a burden on those in difficulty

Perhaps you are still a student or at least have fond memories of your student days. Most of us would have liked to have more cash at that time in our lives. We accept that funds will be tight during our studies because we know that they will improve our long-term career prospects. At the same time, however, we have to pay little or no tax to the State as students – filling out a tax return is just a pro forma exercise. The government is happy to offer this relief for students in the knowledge that, in all likelihood, it will be rewarded with tax revenues once they qualify and enter paid employment. The stamp duty on new issues turns this principle on its head. The State calls on business owners to pay up when they want to amass equity capital in order to build a strong future for their company. That simply does not make sense. The stamp duty on new issues should be abolished now so that companies in crisis can be stabilised, thus securing jobs, instead of facing an additional burden. By doing away with this tax, the State would be investing in the future of our companies, just as it does for our students. The State will also benefit because stronger companies earn more money and thus pay more tax.

Mountains or seaside?

Are you planning your summer holiday yet? How do you choose where to go? Do you want stunning views, culture, good food, a short journey or good value for money? In the end, all of these factors probably influence your decision. The same is true for companies when it comes to choosing where to base their operations and invest their capital. They take a combination of different factors into account to find the best overall package. This is important for Switzerland not just because of the competition it faces from other countries around the world, but also in light of the OECD’s plan for a minimum tax on corporate profits. Abolishing the stamp duty on new issues will help Switzerland to remain an attractive business location going forward.

Offering an attractive base for companies and encouraging them to invest and raise capital even in times of crisis will also benefit Switzerland’s banks, since they are a reflection of the real economy. By voting “yes” on 13 February, you will be making an investment in our country’s future.


Nicholas John
Former Public Affairs Manager