An unconstructive left and criticism that doesn’t last

Firstly, the opponents are concealing the fact that Parliament has significantly tightened the draft. Only interest paid New Bonds are exempt from withholding tax. Existing bonds will continue to be taxed. This exceeds the figures for lost profits stated in the notification. The direct costs will not exceed a few tens of millions of francs. The federal government will not even feel the costs of the reform.

Second, opponents completely ignore the benefits of the reform. According to the message from the Federal Council, the benefits of the project (additional tax revenue) clearly outweigh the costs (tax losses). Since the withholding tax is only waived for new bonds, the costs arise much later and are spread over many years. The benefits of the reform are only becoming more apparent. It is hard to find a comparable example of reform that offers such low risks and such great long-term benefits.

Thirdly, the Confederation, cantons and communes also benefit from lower interest rates. Thanks to the reform, the public sector will be able to finance itself more cheaply. This relieves public budgets and not only benefits taxpayers, but everyone who is looking for public services. The left, otherwise so attached to public service, does not talk about it.

Fighting the withholding tax reform by claiming that it will lead to high tax losses is dishonest. The deficit is largely compensated for by the additional income. This hypothesis is plausible. The withholding tax is a grain of sand that hinders the functioning of the Swiss capital market. For decades it drove much of the bond trade abroad. With the reform, this will no longer be the case. There are only advantages for Switzerland.

The disadvantages of withholding tax have been known for decades. More than ten years ago, the Federal Council wanted to initiate a reform. Then the planned reform was tightened due to the financial crisis. Since then, the discussions and projects have continued almost without interruption. If there is a tax problem in Switzerland that affects economic activities and that everyone wants to see solved, then it is that of withholding tax. Several studies conducted at different times confirm this.

However, the media sometimes criticizes these studies. Criticism is not a problem. But it would be appropriate for those who engage in criticism to propose solutions. This remark applies in particular to criticism from academic circles. They don’t. You are content with criticism, but you should also question yourself. Some claim that the abolition of stamp duty on foreign capital in 2011 did not bring the positive results announced. We would be in the same situation today. However, they conceal the fact that the positive effect of the reform at that time largely depended on a second reform. The Federal Council had set this out clearly. What was this second reform? It is the reform that is being voted on today and that has been long awaited like no other: the reform of the withholding tax.

PS Left opponents announce that the gap will increase as interest rates rise. They vehemently criticize the Federal Council for minimizing the costs of the reform by basing its calculations on an interest rate of 1.5%. With interest rates of 3 or 4 percent, the reform would be significantly more expensive, they say. The Federal Council itself refutes this erroneous assertion, but that is not the point. During a recent session of the parliamentary committee there was talk of abolishing the rental value of apartments for private use. The left also rejects this reform and once again refers to a considerable deficit. The loss of earnings caused by this reform is all the smaller as the interest rate is high: with an interest rate of 3%, the costs would therefore be nil. So in this case the left is not based on 3%. Without being in a bad mood, you understood that in this case we are talking about the rate of… of course 1.5%.

#unconstructive #left #criticism #doesnt

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