Suissenégoce rejects new taxes on profits (cross-border guide)

Context

In brief

• Suissenégoce rejects new profit taxes
• Risk of oil shortage in Switzerland ruled out
• 50% of the petrol price derives from taxes

Key facts

• Association: Suissenégoce
• Sector: Commodity trading and shipping
• Representative: Florence Schurch
• Policy: Karin Keller-Sutter
• Refinery: Cressier
• Refinery coverage: 30%

Suissenégoce, the association of Swiss companies active in commodity trading and shipping, has expressed strong opposition against any hypothesis of additional taxation targeting the profits of companies in the sector. In an interview with the Awp agency, Secretary General Florence Schurch addressed recent political discussions and international economic tensions directly involving Switzerland.

Taxing the profits of companies active in the oil and commodity sector more heavily does not represent an effective solution, according to the association, since the companies involved already pay huge sums in taxes, quantifiable in hundreds of millions of francs. The head of the Federal Department of Finance, Karin Keller-Sutter, herself highlighted how the Confederation managed to close its budget thanks to the tax revenue generated in Geneva.

The role of companies and pump prices

Companies in the sector operate on the global market and are remunerated for their brokerage and supply activities, but cannot be held responsible for world geopolitical events or fluctuations in fuel prices. The price applied at the petrol pump depends on multiple complex factors, including refining costs, transport expenses, the exchange rate and excise duties applied by government authorities.

Operational details

The tensions recorded in the Middle East have caused a drastic reduction in oil flows through the Strait of Hormuz and, more recently, through the Bab el-Mandeb Strait, blocked by Houthi activities. Despite this complex scenario, there is no risk of energy shortages in Switzerland. This security is guaranteed on one hand by the country's accumulated strategic reserves and on the other by Switzerland's ability to absorb price increases with greater ease compared to other nations.

Supply Strategies and Alternative Routes

When oil becomes less accessible in certain geographical areas, the task of traders consists in diversifying supply sources, turning to alternative producing countries such as Norway, Africa, or the United States. The real risk for the market is not the physical lack of the raw material, but rather the upward price dynamics due to lower global availability. Tariffs depend entirely on market trends and are subject to random factors that make it impossible to predict the maximum level prices could reach.

Regarding transport routes, logistical difficulties in the Persian Gulf force traders to transport oil by truck across the Arabian Peninsula to reach the Red Sea and load it onto ships, as the pipeline crossing Saudi Arabia has been hit by bombings. This extraordinary logistical chain and growing insurance costs inevitably contribute to pushing final energy prices upwards, while the duration of these price hikes represents the true critical issue for the economic system.

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Key points

Swiss legislation provides specific tools to address emergency energy situations and market volatility. The country has strategic oil and gas reserves that can be activated in case of extraordinary need. A concrete example involves the Cressier refinery in the Canton of Neuchatel, which supplies about 30% of the national fuel demand and for which the Confederation recently authorized a withdrawal from strategic reserves to cope with transport difficulties.

Mitigation measures and fuel taxation

The logistical situation is also aggravated by internal factors, such as water levels in the Rhine River that are too low to allow full loading of vessels used for the transport of fossil energy. In this context, if fuel prices were to rise excessively, the federal government has the power to intervene by reducing the tax burden on petroleum products. It is worth noting that about 50% of the total price of gasoline paid by consumers at the pump consists of state-determined taxes and excise duties.

Commodity trading companies continue to generate significant profits, but their logistical and commercial role ensures that the resident population can count on a constant energy supply, guaranteeing heating and mobility even during periods of international crisis. To explore the economic situation further and assess the impact on the cost of living and the management of personal expenses in Switzerland, consult our dedicated tool on the cost of living.

Source: swissinfo.ch