In the wake of a national petition filed in October in the country known for its close relationships with high-net-worth clients from all over the globe, bankers are worried that the country’s special tax benefit could be eliminated. And that, they say, would eliminate business as well.
Bloomberg reported Friday that the Socialist Party intends to discard the 150-year-old “forfait,” an expenditure-based tax that foreigners negotiate with Swiss cantons to avoid paying income tax. The forfait’s days could be numbered, if the Socialists have any say in the matter; indeed, on Jan. 1, Appenzell Ausserrhoden will become the third canton to reject the system; a year later, Basel will do likewise.
“It’s an outrage that ordinary people should pay more tax than rich movie stars, singers and sporting celebrities,” Romain de Sainte Marie said in the report. De Sainte Marie, president of the Geneva Socialist Party, added, “It’s a form of tax evasion.”
A backlash is growing in the Alpine country over the fact that billionaires, such as Ikea founder Ingvar Kamprad, pay a lower tax rate than native Swiss, even as bankers circle the wagons to protect what they say is a lure to draw wealthy clients who bring jobs and growth to Geneva with their money.
“We need to defend it for our own sakes as this is a very interesting customer base,” Gregoire Bordier, president of the Geneva Private Bankers Association, said in the report. “This system already brings significant revenue to the authorities.”