The 99 percent-Initiative, one of two national referendums being voted on in September’s election season, is causing a heated debate in Switzerland on how unequal the country really is.

99 percent-Initiative hopes to ease inequality in Switzerland

The 99 percent-Initiative, first started in 2017, is a "popular initiative" by the Young Socialists (JUSO) aimed at tackling wealth inequality in Switzerland. It aims to charge new business taxes to those who live off interest payments or dividends from their business. 

The name is a reference to an often-used social dynamic in the west; that the top 1 percent of the population earns several times more than the 99 percent below them. The leaders of the 99 percent initiative hope that the extra money raised by increasing capital gains tax will coincide with tax cuts for lower and middle-income earners. 

“It is time to introduce a fair tax system. 99 percent of the population must earn a salary to make a living. They work for the wealthiest 1 percent of the citizens,” said Tamara Funiciello, former president of the Young Socialists, at the opening of the petition in 2017. JUSO make the argument that people working in Switzerland are having to contribute the same as those who live off accumulated wealth and that the tax system should benefit workers more. 

Critics of the JUSO initiative say it is vague and ambiguous

Federal Finance Minister Ueli Maurer, from the Swiss People’s Party (SVP) has criticised the vote, stating that the demands included in the popular initiative do not consider how the Swiss taxation system already taxes those with large amounts of wealth, citing the wealth tax charged by Swiss counties (cantons) and how federal income tax rises in line with income.

“There are so many ambiguities that are beyond the usual scope of a popular initiative,” said Maurer, saying that the initiative’s lack of detail was cause enough to reject the referendum. The initiative has also been criticised by the Swiss Trade Association (SGV) for its effect on business.

Vice president of the association and National Councillor for FDP: The Liberals, Daniela Schneeberger, said that the initiative weakens the business world. She claims that business transactions, such as handing companies over to the next generation, will be far more challenging if the business transfer or capital gains tax is increased. 

How unequal is Swiss society?

According to a study by the Neue Zürcher Zeitung, although inequality in Switzerland has increased over the last decade, it is roughly at the same level it was during the 1960s and well below average compared with other western nations. Between 1994 and 2018, lower-wage workers saw a wage increase of 19 percent, whereas higher-wage workers saw a 25 percent increase to their salaries.

In terms of wealth, the top 1 percent currently own around 25 to 30 percent of assets in Switzerland - around the same level as during the 1970s. Compared with the rest of the world, Switzerland is more equal than expected, but the Young Socialists argue that due to Switzerland’s unique and stable economic situation, there is an opportunity to strive for even greater equality.