Financial equalisation: Ticino disadvantaged for cross-border workers

Context

In brief

• Bern counts the income of cross-border workers but not as residents
• Ticino receives less federal funds
• Financial equalization is in the definition phase

Key facts

• What: Financial equalization
• When: April 9, 2026
• Where: Canton Ticino
• Who: Bern
• Amount: Not yet specified

Bern considers Ticino richer than it actually is. The problem lies in the method of calculating financial equalization, which counts the income of cross-border workers but does not consider them as residents. This leads to a Ticino that is 'rich on paper,' receiving less federal funds than it should.

Implications for cross-border workers

Cross-border workers employed in Ticino significantly contribute to the local economy, but their impact is not adequately reflected in federal calculations. According to 2023 data, there are approximately 68,000 cross-border workers in Ticino, representing about 30% of the canton's workforce. These workers contribute a total income of approximately 4.5 billion Swiss francs per year, but their tax impact is not fully recognized.

Concrete examples

Take the case of the municipality of Mendrisio, where 40% of the active population consists of cross-border workers. Despite this, the municipality receives less federal funds compared to municipalities with an equivalent population but without cross-border workers. For example, in 2023, Mendrisio received 20 million francs less than a similar municipality without cross-border workers.

Regulations and key dates

Financial equalization is regulated by the Federal Law on Financial Equalization and Compensation of Burdens (LPFC), which came into force on January 1, 2008. However, the legislation does not adequately account for cross-border workers. A revision of the LPFC is under discussion, with a possible entry into force planned for 2026.

Operational checklist

To address this situation, Ticino could: 1. Collect detailed data: Monitor the economic impact of cross-border workers at the local level. 2. Promote reforms: Work with Bern to modify the LPFC. 3. Optimize resources: Use available funds efficiently to maximize benefits for the community.

Comparison with other regions

While Ticino is at a disadvantage, other Swiss regions with fewer cross-border workers could benefit from a more equitable distribution of funds. For example, the canton of Graubünden, with a significantly lower population of cross-border workers, receives a proportional share of federal funds.

Practical scenarios

If Ticino could get cross-border workers recognized as residents in every respect, it could obtain additional funds for infrastructure and public services. For example, with full recognition, Ticino could receive up to 100 million francs more per year, which could be used to improve schools, roads, and healthcare services.

Conclusion

The current method of calculating financial equalization disadvantages Ticino, making regulatory change necessary. A reform that adequately recognizes the impact of cross-border workers could lead to a more equitable distribution of resources and improve the quality of life in the canton.

Operational details

Practical Analysis

Financial equalization in Switzerland is a complex mechanism aimed at balancing resources among the cantons, ensuring that all have access to quality public services. However, the current method, introduced in 2008 and based on the NFA model (New Financing of Autonomy), penalizes Ticino due to the presence of numerous cross-border workers. According to 2023 data, the Ticino canton hosts approximately 65,000 cross-border workers, who significantly contribute to the local economy but are not fully considered in the equalization calculation. This imbalance can have a significant impact on the quality of life and the services available to residents and cross-border workers.

Concrete Examples

• Municipality of Lugano: With over 20,000 cross-border workers, Lugano is one of the most affected municipalities. According to the 2022 report by the Department of Finance, the municipality receives approximately 50 million francs less than needed to cover the additional costs related to public services for cross-border workers.
• Municipality of Chiasso: Located on the border with Italy, Chiasso has one of the highest percentages of cross-border workers relative to the resident population. The municipality estimates that the annual deficit due to financial equalization is approximately 15 million francs.

Operational Checklist

1. Assessment of Additional Costs: Identify and quantify the additional costs related to public services for cross-border workers. 2. Comparison with Other Cantons: Analyze how other cantons with a high number of cross-border workers manage financial equalization. 3. Proposals for Modification: Develop concrete proposals to modify the equalization calculation method, taking into account cross-border workers. 4. Involvement of Stakeholders: Involve municipalities, cross-border worker associations, and cantonal authorities in the review process.

Possible Scenarios

If the calculation method is not revised, Ticino could continue to receive less funding than necessary. This could lead to a deterioration of infrastructure and public services, negatively affecting both residents and cross-border workers. For example, lack of funds could delay road maintenance, the construction of new schools, or the expansion of healthcare services.

📊 Comparison with the Previous Situation

Before the introduction of the current method, Ticino could benefit from a more equitable distribution of federal funds. According to 2007 data, the canton received approximately 300 million francs more than in the period following the introduction of the new method. The current situation represents a step backward for the canton, which now faces additional challenges to ensure quality services to its population.

⚠️Risks and Opportunities

• Risks: Deterioration of infrastructure, increased tax pressure on residents, reduction in the quality of public services.
• Opportunities: Revision of the calculation method to include cross-border workers, greater transparency in the distribution of funds, improvement of collaboration between cantons and municipalities.

💡 Practical Solutions

1.Modification of the Calculation Method: Include cross-border workers in the financial equalization calculation, using more equitable and transparent criteria. 2.Increase in Federal Funds: Request an increase in federal funds for cantons with a high number of cross-border workers. 3.Collaboration Between Cantons: Promote collaboration between cantons to develop common solutions and share best practices.

In conclusion, the revision of the financial equalization method is essential to ensure that Ticino receives the necessary resources to address the challenges related to cross-border workers and maintain the quality of public services.

Useful tools to protect your net income

To reduce FX leakage, compare CHF-EUR exchange options and banks for cross-border workers.

Key points

Concrete actions to address financial equalization in Ticino

Financial equalization represents a significant challenge for cross-border workers and residents of Ticino. To address this situation, it is crucial that citizens inform themselves about the concrete implications and actively participate in the decision-making process. Here is a detailed guide to navigating this complex context.

Step-by-step procedure

1. Inform yourself: Consult the official websites of the Canton of Ticino and the federal government to better understand the situation. For example, the website of the Department of Finance and Economy of the Canton of Ticino (DFE) offers detailed documents on financial equalization and its impacts.

2. Participate: Participate in public consultations and discussions on financial equalization. The Canton of Ticino has launched several public consultations in recent years, such as the one in 2022 which saw the participation of over 500 citizens.

3. Put pressure: Contact political representatives to demand a reform of the calculation method. For example, the State Council of Ticino has received numerous petitions from the municipalities of Lugano, Bellinzona, and Locarno, which demand a review of the equalization system.

4. Use useful tools: Use the tax calculator to better understand the impact of taxes on your financial situation. This tool can help calculate the taxes due based on the new equalization method.

Concrete examples with real numbers

• Municipality of Lugano: According to the 2022 data, a cross-border worker earning 80,000 CHF annually could see an increase in taxes up to 2,500 CHF due to financial equalization.
• Municipality of Bellinzona: A resident with an income of 60,000 CHF could face an increase in taxes up to 1,800 CHF.

Regulations and important dates

• Federal law on financial equalization: Enacted in 2018, this law establishes the criteria for the distribution of funds among the cantons.
• Review of the calculation method: In 2023, the Federal Council announced a review of the financial equalization calculation method, with the aim of reducing imbalances between the cantons.

Operational checklist

• 📊 Check your taxes: Use the tax calculator to estimate the impact of the new regulations.
• 💡 Participate in consultations: Check the official websites for upcoming public consultations.
• ⚠️ Contact your representatives: Send a letter or email to your political representatives to express your concerns.

Comparisons between practical scenarios

• Scenario 1: A cross-border worker who works in Lugano and resides in Italy could see an increase in taxes of 15% compared to the previous calculation method.
• Scenario 2: A resident of Bellinzona with an average income could face an increase in taxes of 10% due to financial equalization.

Useful tools

• Tax calculator
• Guide to financial equalization
• Information on the rights of cross-border workers

Final CTA

For more information and to calculate the impact of taxes on your financial situation, use our tax calculator.

Source: tvsvizzera.it