We've touched briefly on this subject on other threads, but today I saw an interesting article on Swissinfo about the tax system. Here's a quote:


Full article here.

To quickly summarise the current situation:

• There are three types of income taxes we pay here - community, canton and federal.
• Tax returns are collected and processed by the tax office in the local communities. This means that there are some 4,600 tax departments who are overseen by 26 canton tax departments (not counting half cantons, etc)
• Unlike many other countries - all tax returns are hand checked by tax department staff to ensure that they are correct. The concept of taking a return at face value and doing spot checks (with the possibility of fines / jail) to encourage tax payers to be honest doesn't really apply.
• Married people file a single return, income is combined. The second column still carries the term "taxable wife" (Steuerpflichtige Ehefrau in German)
• Foreigners who submit tax returns may have to wait 2-3 years before their returns are fully processed and they get their refunds (at least in canton Zurich)
• I'm not aware of any online filing possibilities in Switzerland. Some programs generate the returns, but they are printed on paper and processed as paper by the respective tax departments.

Many consider the Swiss tax return to be complicated. Personally I don't think it is that bad, with many generous deductions that would never be allowed in other countries. I do think that the system of administration surrounding taxation costs us dearly in terms of administrative inefficencies.

So it looks like I'm not the only one that thinks there should be some reforms. The Swissinfo article tells us that the "center-right Radicals" are proposing the simplify the scheme. Is it a shame that "Radicals" have to propose an idea like this?

Do you think that the system needs reform, or are you prepared to believe that everything is just fine the way it is? After all, it's worked for so long, why should we pay attention or reforms or improvements that other countries are making?

First off, I don't believe that tax reforms will result in any reduction in taxes. By the same token we could argue that loss of jobs from 4600 tax departments - and the 1000s of tax advisors no longer required - will even increase taxes.

The UK's Inland Revenue has simplified the UK income tax system over the years. Today the UK tax form can be completed in a few minutes. Why? Because there is hardly anything to claim! Life insurance, mortgage interest etc etc have all been removed. No tax reductions resulted, in fact people's tax liability went up.

I am cynical about any promise/suggestion that taxes will go down through improved efficiency.

There is an interesting move afoot in canton Glarus, where the 25 communittees of the canton recently voted for financial reasons to mergre in to only 3. This will of cut down the tax offices accordingly.
(www.swissinfo.org/eng/search/detail/Where_democracy_springs_eternal.html?siteSect=881& sid=6717634&cKey=1147944490000)
But reduce taxes? I don't think so...

I find the current Swiss tax return refreshingly simple.

(But that's my perspective as an expat American. Our US returns generally run to 200 pages... )

I'm certainly prepared to believe everything is just fine the way it is... after all, I live in Steuerparadies Schwyz... (Tax paradise SZ)

But on a serious note, I moved out to the boondocks of SZ specifically for it's tax advantages. I pay significantly less tax than I did in ZH - but I also accept that the same level of services are not available here. It's a trade-off, and I like that the system allows me to make that choice.

One of the things I appreciate about the Swiss system, as opposed to the US, is that the bulk of my tax money stays local. The tax bill hurts a little less when I can see how the community benefits.

I see the 'one size fits all' tax return proposal as a bit of a smoke screen. It's not the filing form that makes the current system expensive to administrate, it's the multiple layers of bureauocracy. I'd like to see inefficiencies in the way the current system is administered addressed first.


---edited for spelling.

In the UK the tax burden is exactly the same wherever you live. So residents of Scotland for example, like everywhere else see their tax money disappear into a 'black hole' and have no idea where the money goes. Thus cheating/fiddling tax is regarded as 'a good thing' and if you get away with not declaring something or moonlighting for cash and paying no tax, you are a hero who beat the system.

In Switzerland doing the same makes you are a thief who diddled the local school, hospital or starving orphans out of what was rightfully theirs...

200 pages?! Mine have never come anywhere near that long!

I agree with you entirely. It is down to the local communities and kantons to act responsibly and spend their money wisely. Creating some kind of unified tax system will just allow those who don't watch their pennies to spend some more... You can't tell I am from Yorkshire can you?!

Actually it wasn't a proposal to create a unified tax system at all. Did you RTFA?

Even if there were a centrally processed tax system (instead of 4600 different tax departments) it would not mean that the money would have to be allocated differently - the collection/administration of taxes and the allocation and eventual spending of them are different issues.

I see this as a first step - simply streamlining the process a little and trying to remove some of the administrative overhead. It's not an earth shattering proposal to covert to the system of government used in other countries.

This is Switzerland after all - each small step takes time.