Editions

Countries, as well as constituent states within countries, compete for high-income taxpayers. Tax competition and attempts to keep aggressive tax practices in check have increased in recent decades. However, even if low income-tax rates attract top earners, this does not necessarily mean that simple tax cuts alone will pay off. Typically, only a combination of measures leads to success.

In April of this year, KOF and Switzerland’s Neue Zürcher Zeitung (NZZ) newspaper surveyed economists on the subjects of state aid during the coronavirus crisis and the future of public finances. There are hardly any economists who think that the debt brake should be applied very rigorously. There is also agreement among the 167 survey respondents that cuts in education, research and social security should be avoided. The level of government support is generally not considered to be too high.

The coronavirus crisis is causing Switzerland’s national debt to rise. There is already vigorous debate about how to respond to this increase. However, Swiss public finances are still in good shape even in the wake of the crisis. Calculations show that the country’s debt ratio should fall relatively quickly even without fiscal austerity.