1st January 2024 VAT rise to fund pension reforms for ageing population
An ageing population, and funding shortage in the public pension system (OASI), has led to the Swiss to vote in September 2022 for a rise in VAT rates from January 2024 as follows:
- Standard rate from 7.7% to 8.1%;
- Reduced rate from 2.5% to 2.6%
- Hotel accommodation rate from 3.7% to 3.8%
The vote for the increase in Value Added Tax received 55.1% of the vote. The rise will only remain in place until 2030.
Package of reforms triggers national referendum
Since the VAT rate change was linked to other measures to change the benefits package, and therefore a change to the Federal Constitution, a national referendum was required – hence today’s vote.
The extra revenue would be applied to cover shortages on the Swiss Old Age Insurance contribution which falls short of the ongoing payments. This is being exacerbated by the wave of Baby Boomer generation (born between 1946 and 1964) now retiring.
As part of the reforms, women will work longer – to 65 years instead of 64.
Second attempt to raise Swiss VAT to fund pensions
Back in 2017, the Swiss voted against a VAT rise to fund a pension reform package. The rate then was 8%, and the vote proposed 8.3%. Â So instead a planned cut to the current 7.7% went ahead on 1 January 2018.
