The Federal Council adopted the message on the Compass Initiative. (cross-border guide)

Context

The Federal Council adopted the message on the Compass Initiative.

On 21 July 2023, the Federal Council adopted the message on the Compass Initiative, rejecting the initiative without presenting a direct or indirect counter-project. This decision was taken following an assessment of the contents of the initiative and the consequences it would have on the Swiss economy.

The Compass Initiative, presented in 2020, proposed to introduce a series of measures to reduce economic and social inequalities in Switzerland. Among the proposals were progressive taxation, reduction of full-time working hours, and creation of new jobs in the public sector.

The Federal Council rejected the initiative on the following grounds: "The initiative does not solve the underlying problems of economic and social inequality, but rather exacerbates its negative effects." In addition, the Federal Council stressed that the measures proposed by the initiative would have negative effects on the competitiveness of the Swiss economy and GDP growth.

For example, if the initiative had been approved, it is estimated that the annual cost to the Confederation would have exceeded 10 billion francs, as reported in the 2022 Federal Council report. In addition, progressive taxation would have led to an increase in taxes for entrepreneurs and independent professionals, who already pay a

Operational details

The Federal Council adopted the message on the Compass Initiative, which aims to fill gaps in Swiss banking regulation. The Credit Suisse crisis has highlighted the limits of the current regulatory framework, highlighting the need for urgent interventions to ensure the stability and security of the national financial system.

The crisis at Credit Suisse, one of the leading Swiss banks, had a significant impact on the Swiss and international financial market. The bank faced a severe crisis of confidence, which led to a reduction in deposits and a significant loss in value of its currency, the Swiss franc. The Federal Council has therefore decided to take urgent measures to ensure the stability of the financial system and to protect the interests of depositors.

The message on the Compass Initiative foresees the creation of a new banking supervisory body, which will have the task of monitoring and regulating the activities of Swiss banks. The institution will be responsible for ensuring that banks operate in a transparent and accountable manner, and that they comply with regulatory standards regarding credit risk and risk management.

Among the measures envisaged, there is the creation of a guarantee fund for depositors, which will aim to protect their interests in the event of a banking crisis. The fund will be financed with a contribution of 10% from Swiss banks, which will be calculated in

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Key points

The Federal Council adopted the message on the Compass Initiative, which provides for a temporary increase in VAT to finance outflows for the arming of the army. This decision was taken after a thorough discussion with the representatives of the Swiss cantons and cities.

The Compass Initiative was put forward to ensure the security and stability of the Swiss army. The Federal Council approved the message to Parliament, which provides for a 2% VAT increase for a period of two years. This increase will be used to fund purchases of armaments and materials for the army.

According to Federal Council estimates, the VAT increase will bring in about CHF 3.5 billion per year. This money will be used to purchase new tanks, aircraft, and missiles, as well as to fund troop training and education.

The Compass Initiative has received support from many Swiss cantons and cities, including Zurich, Bern and Lausanne. These cities stressed the importance of a strong and efficient defence to ensure Switzerland's security.

However, some critics have expressed concerns about the impact of the VAT increase on the Swiss economy. According to them, the increase in VAT could increase the cost of living and reduce the competitiveness of Swiss businesses.

To mitigate these effects, the Federal Council has provided a package of measures to

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Source: admin.ch