The latest round of Swiss national referendums is fast approaching. On September 25, voters will go to the polls to decide on four referendums covering issues from AHV and pensions to taxes and animal rights. Here’s what expats need to know.

Swiss national referendums September 2022

The vote on September 25 marks the third set of Swiss referendums in 2022. Alongside those specific to councils (Gemeinde) and cantons, citizens in Switzerland have an opportunity to vote on constitutional issues, and popular and government initiatives.

This round is unique out of national votes this year as two of the subjects on the ballot are co-dependent on each other - meaning that they both have to pass in order to be made law. Overall, two votes are on amendments to the Federal Constitution, one is a popular initiative and one is a vote on an objection to a government policy.

AHV 21 to reform Swiss pension funding and women's retirement age

The first two votes concern reform to the AHV and state pension scheme in Switzerland. Like the rest of Europe, government-run pension schemes in the alpine nation have come under increased financial pressure, as baby boomers reach retirement age and fewer people pay into the scheme. 

This financial “black hole” is what the “Additional financing of the AHV through an increase in VAT” and “Amendment to the Federal Law on Old Age and Survivors' Insurance” referendums - together known as "AHV 21" - hope to solve. In order for the plan to be passed, both referendums have to be approved by the public. If one fails to earn a majority, both will be struck down.

Raising value-added tax rate to pay for Swiss pensions

The “Additional financing of the AHV through an increase in VAT” is a plan to raise the value-added tax rate from 7,7 to 8,1 percent on most goods - providing 12,4 billion Swiss francs more funding to pensions by 2032.

Retirement age for women to be voted on at referendum

The second, and arguably most contentious part of the vote, are plans to create a standardised retirement age for men and women. In practice, this will mean that the retirement age for women will be raised to 65, to equal that of men. Women expecting to retire in the next nine years - those born between 1961 and 1969 - will have their pensions subsidised as compensation for the change.

Arguments for and against AHV 21 and women's retirement age referendum

Supporters of both initiatives argue that AHV reform is urgently needed to ensure that future generations will receive a pension. State expenditure on pensions is outpacing the income generated through taxpayers, meaning that a compromise of more income (increased VAT) and less expenditure (higher women’s retirement age) is needed.

The Federal Council and parliament say that their plan would secure pension finances for another 10 years. They highlight that pension schemes have not been reformed for 25 years, and that some form of workable compromise is sorely needed to keep pensions afloat.

The anti-referendum committee, which secured enough votes to hold the referendum on the retirement age for women, argue that the AHV reform came at the expense of working women. Their estimates say women will earn 26.000 francs less pension on average if the referendum passes and that women’s pensions are already around 33 percent less than men’s.

They also disagree with supporters of the referendum by noting that Swiss pension funds are still largely solvent and profitable, once bonds and investments are taken into account. If the economy continues to grow, opponents claim the reform may not be necessary at all.

Initiative to scrap part of the withholding tax in Switzerland (Verrechnungssteuer)

The third referendum on the list relates to the withholding tax charged to entrepreneurs and international companies in Switzerland. The withholding tax (Verrechnungssteuer) is a 35 percent "temporary tax" levied on income from financial investments such as interest and dividends paid to investors, life insurance, third pillar pensions and some lottery and gambling winnings.

When this income is received, 65 percent is given to the payee, while 35 percent is given to the government. However, if the person that received the income declares the investment on their Swiss tax return, the tax is fully refunded. It was initially designed to prevent tax evasion, as individuals would be incentivised to declare all their income, as conventional Swiss taxes on dividends are far lower than the 35 percent withholding charge. 

However, the government is concerned that the tax is hurting the Swiss economy, as companies are choosing to pay dividends to workers in nations that do not have a withholding tax, meaning that the state loses potential revenue from businesses. Therefore, if approved, the referendum would scrap withholding tax for dividends issued within Switzerland.

Views for and against the partial abolishing of Swiss withholding tax

Supporters, which include the Federal Council and most of parliament, argue that the reform would bring lost tax and jobs back to Switzerland. They note that the reform “can pay for itself” as no tax revenue is lost, and would strengthen the alpine nation’s position as a place to do business.

Opponents make the case that scrapping part of the withholding tax will only lead to more tax evasion. According to the referendum committee, getting rid of the charge would lead to more financial crime and a tax shortfall of up to 800 million francs. They also note that the reform would mainly benefit investors rather than regular residents in Switzerland.

Factory Farming Initiative in Switzerland

The final referendum on the ballot in September is the “Factory Farming Initiative.” The initiative says that, while Switzerland has some of the strictest animal welfare laws in the world, they can still be improved. According to the text of the initiative, the referendum would “include the protection of the dignity of farm animals such as cattle, chickens or pigs in the constitution” and ban factory farming in Switzerland. 

The federal government would be required to set minimum standards for the size and capacity of animal farms, based on the BioSuisse regulations created in 2018. The rules would also apply to all animal products imported to Switzerland. 

Arguments for and against the Factory Farming Initiative

The organisation that proposed the initiative claims that while the Swiss Animal Welfare Act is often called “exemplary,” the reality on farms in Switzerland is far from the standards stated in the law. The proposal calls for “animal-friendly housing and care, regular exercise outdoors, smaller groups and gentle slaughter,” to be properly enforced.

Opponents, which include the Federal Council and parliament, argue that more and more animals are already being kept in an “animal-friendly manner.” They claim that applying bio-organic standards to all food imported to Switzerland would take significant effort and would make regular groceries far more expensive.

Find out more about referendums in Switzerland

After the vote on September 25, the next set of referendums is set to take place on November 27. For more information on the current set of proposals, please consult the official government website.