(Bloomberg) -- Switzerland’s government intends to slash state spending, proposing to parliament cuts worth multiple billions in a radical move to balance a budget that — despite internationally low debt levels — has been running deficits since the Covid pandemic.
From 2027 to 2030, the country’s seven-member executive aims to relieve the federal tab by 3.6 billion to 4.7 billion francs ($4.2 billion-$5.5 billion) per year, it said in a statement on Friday. The reductions were largely suggested by an expert group and focus on reducing expenses.
“The federal government has a spending problem, not a revenue problem,” Finance Minister Karin Keller-Sutter said in Bern. “The Federal Council wants to refrain as much as possible from raising taxes or introducing new ones.”
The biggest cuts include reducing climate subsidies, decreasing federal contributions to the state retirement scheme, cutting funds for childcare and freezing the spending on development aid until 2030. The government also intends to drop support for the English-language program of Switzerland’s public broadcaster and to chop 20% off the budget for tourism marketing.
A key reason why the executive wants to refrain from new taxes is that a number of hikes of this kind just came into force or are scheduled, Keller-Sutter said. These include increases of VAT to fund a recently decided pension boost and of corporate dues to meet the OECD minimum tax.
Switzerland has run budget deficits since 2020 while expenses are on a rising trajectory. Still, at 39% of gross domestic product, state debt is lower than in most advanced economies. The loads of the US, UK, France and Italy all sum up to more than 100% of those nations’ economic output.
(Updates with comment from finance minister in third paragraph)
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