OECD Economics Department Working Papers
Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
Making the Tax System Less Distortive in Switzerland
The tax burden in Switzerland is low in international comparison, largely reflecting the substantial non-tax
compulsory contributions towards the health and pension systems which are managed by private
institutions. Taxation of personal income and labour earnings is relatively high, whereas the taxation of
consumption is low. Empirical research on OECD economies and on Switzerland specifically indicates that
shifting taxation away from personal income towards the taxation of consumption would strengthen
incentives to engage in economic activity. The structure of the corporate tax burden could be improved to
remove disincentives for small firms to grow. Reducing the generous provisions which allow interest
payments to be deducted from taxable personal income would reduce incentives for households to
excessively leverage their wealth, with benefits both for financial stability and equity in the tax system.
While tax competition among sub-national authorities has reinforced fiscal discipline, adverse side effects
on equity could be reduced, including through greater reliance on real estate taxation in municipalities.
This Working Paper relates to the 2012 OECD Economic Survey of Switzerland
(www.oecd.org/eco/surveys/switzerland).
Keywords: taxation, Switzerland
JEL:
H2: Public Economics / Taxation, Subsidies, and Revenue
- Click to access:
-
Click to download PDF - 999.52KBPDF
-
Click to Read online and shareREAD