Swiss government proposes modest VAT hike to fund new AHV pension

Elisabeth Baume-Schneider, Switzerland's health minister, outlined a federal proposal to lift the value-added tax by 0.4 percentage points as part of the financing for the 13th AHV pension, slated to cost several billion francs upon its initial distribution. The additional revenue is intended to cover a share of these expenses while the reduced VAT rate for everyday necessities such as food and medicine will remain intact.

The liberal FDP has launched a counter-campaign, claiming the tax rise would heavily burden consumers and small enterprises, and is urging a fiscal austerity approach instead. The amendment will be put to a popular vote at the end of November, making it a contested issue ahead of the referendum. The debate reflects broader tensions over social spending and tax policy in Switzerland.