Tax on capital gains targets Switzerland’s wealthy elite

The ‘”99% initiative” by the left-wing Young Socialists is another attempt to tackle disparities in distribution of wealth and income. It refers to the overwhelming majority in Switzerland who depend on an income from work.

The initiative is due to come to a nationwide vote on September 26 alongside a proposal to allow same-sex marriage in Switzerland.

It is the third set of votes this year and part of Switzerland’s system of direct democracy.

What’s at stake?

The youth chapter of the Social Democratic Party wants to increase tax on capital revenue at national and cantonal level - that is dividends, shares, interest on wealth and rents - by a factor of 1.5 compared with regular income tax.

Gains below CHF100,000 ($108,500) are not subject to the higher level of taxation. Social security benefits and income from self-employed activities would also be exempted.

The new revenue for the national and cantonal authorities – estimated by the campaigners at CHF10 billion annually – is to be used to reduce the financial burden for middle- and low-income earners and for welfare according to the proposed constitutional amendment.

Further details are to be defined by parliament.

Switzerland currently has no national levy on capital gains but many cantons, which have wide-ranging autonomy on fiscal matters, charge holders of financial assets with a wealth tax.

What are the main arguments for the initiative?

The campaigners argue a tax reform is essential to prevent a widening gap between rich and poor as about 43% of assets in Switzerland are in the pockets of just 1% of the population.

This leaves the other 99% of the population to share the rest – hence the name of the initiative.