Swiss FDP campaign against VAT increase

The FDP/PLR party has launched a campaign to oppose a proposed 0.4 percentage point increase in the standard Swiss VAT rate, which is scheduled for a public vote on November 29. The increase, intended to help finance the 13th AVS (old-age and survivors' insurance) pension, would raise the rate to 8.5%.

Party leaders argue the tax hike will disproportionately affect households facing high rents and health insurance premiums, as well as SMEs, retail, and the catering industry. The FDP has labeled the measure a ‘VAT scam’ and expressed concern that higher domestic prices could drive consumers to shop abroad. To support their opposition, the party cited a study by BAK Economics estimating a potential loss of 3.6 billion francs in economic growth over ten years. While the PLR supports the 13th AVS pension, they advocate for structural reforms, such as raising the retirement age and stricter state spending priorities, rather than increasing the tax burden.

The Swiss Federal Council has formally recommended the VAT increase to secure approximately 1.5 billion Swiss francs annually. The proposed constitutional amendment would raise the standard rate from 8.1% to 8.5% and the hospitality rate from 3.8% to 4.0%, while the reduced rate for essential goods like food and medicine would remain at 2.6%. If approved, the new rates would take effect in January 2028. Because of the shared VAT area, the decision will also automatically affect Liechtenstein, though funds collected there would flow into the general state budget rather than being earmarked for AVS.