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Proposal to replace VAT with emissions levy rejected by Swiss Government | Meridian

Proposal to replace VAT with emissions levy rejected by Swiss Government | Meridian.

n January 2014, the Swiss Government rejected popular initiative titled “energy instead of VAT”. This emissions based levy would have replaced the VAT system in Switzerland. The government refused to bring in this levy as they believe that VAT is the main source of revenue for Switzerland and so the emissions levy would have to consist of extremely high tax rates. These tax rates would be placed on non-renewable energy sources such as gas, coal, oil, and uranium.

The government also said that the new levy would cause a big tax burden on exports due to the current zero rate of VAT on exports. It would also cause a huge amount of damage to international competiveness in cross-border trade.

At present Switzerland has three VAT rates: A standard VAT rate of 8%, a reduced rate of 3.8% for hoteliers and also a second reduced rate of 2.5%.

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