[Super Rich] "Let's Collect More Taxes from the Wealthy"... Controversy Over Wealth Tax Increase in Switzerland

Geneva to Hold Referendum on the 18th
"Concerns Over Millionaires Leaving Their Homeland"

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Following Norway, a plan to raise taxes on the wealthy residing in the Swiss canton of Geneva is being promoted. Swiss wealthy individuals fear that the Norway syndrome, where millionaires left their homeland and emigrated abroad after a wealth tax hike, could be repeated.

According to major foreign media including Bloomberg on the 16th (local time), the Geneva canton government plans to put a tax reform bill to a referendum on the 18th, which includes raising the wealth tax rate from the current 1% per year on assets to 1.5%. Individuals with a net worth exceeding 3 million Swiss francs (approximately 4.3 billion KRW) are subject to this.

If this wealth tax hike, promoted under the name of a 'solidarity tax,' is implemented, the Geneva canton government is estimated to collect an additional 430 million Swiss francs (approximately 610 billion KRW) in taxes over the next 10 years.

After the COVID-19 pandemic, discussions on raising the wealth tax were actively led by the left-wing Green Party. As inequality spread due to the pandemic and public debt increased due to large-scale spending, voices calling for tax rate hikes on corporations and the wealthy grew in some countries.

The bill also explained its purpose by stating, "Major measures are needed to overcome health, social, economic, and climate crises," and "The middle class is suffering from high inflation due to this crisis. It is fair to demand solidarity efforts from millionaires." It emphasized that the wealth tax hike is being promoted under the name of a "temporary solidarity contribution on large fortunes."

However, Bloomberg reported that the wealth tax hike discussion is now a 'legacy of the pandemic' and the situation has changed. During the COVID-19 period, the Geneva canton government recorded large-scale spending and fiscal deficits, but last year it achieved a record surplus of 727 million Swiss francs (approximately 1.04 trillion KRW) due to excess tax revenue. Accordingly, the newly elected Geneva canton government is also emphasizing that it should exercise a veto in the referendum.

Nathalie Fontanet, Swiss Finance Minister, said in an interview with local media, "This proposal was promoted with the purpose of responding to poverty through more financial means during the COVID-19 crisis," but added, "However, in recent years, tax revenue has been sufficient to handle poverty issues."

Concerns are also raised that the wealthy might follow Norway's path of leaving their homeland due to tax burdens. Previously, when the Norwegian government raised the top wealth tax rate from 1.0% to 1.1% last year, many wealthy individuals emigrated abroad, including to Switzerland. However, since the Geneva canton government plans to impose a much higher wealth tax rate of 1.5%, the aftershocks are expected to be stronger.

Among the Swiss wealthy, complaints are already being raised that they pay enough taxes. According to the Swiss government, the top 1.4% bear 69.8% of the wealth tax burden. Meanwhile, 70.4% of the population pay no wealth tax at all. Looking at Geneva canton government statistics, taxpayers with assets over 2 million Swiss francs paid 700 million Swiss francs in taxes last year, accounting for 83% of the total wealth tax revenue.

Vincent Subilia, President of the Geneva Chamber of Commerce, criticized, "We want to avoid the Norway syndrome where the wealthy leave the country," and said, "This idealistic and provocative bill must be stopped. This bill, which could jeopardize the residence of the wealthy in Geneva, is very dangerous." He added, "The number of people targeted by this bill may be small, but if just 10 of them leave the city, tax revenue will decrease by 200 million Swiss francs (approximately 290 billion KRW)."