November 29 vote: VAT increase to finance 13th AHV pension

Context

TL;DR

• A vote on the VAT increase will be held on November 29
• In December, 2,7 million will receive the 13th AVS pension
• From 2028, the standard rate would increase from 8,1% to 8,5%
• Parliament decided by a narrow margin

Key facts

• What → VAT increase to finance the 13th AVS pension
• Rating → November 29th
• Service → 13th AVS for 2.7 million people
• Cost → over 4 billion francs per year
• Normal rate → from 8.1% to 8.5% from 2028
• Hotel sector → from 3.8% to 4%
• Reduced rate → 2.6%, unchanged
• Additional revenue → approximately 1.4 billion per year

On November 29th, Swiss voters will vote on the VAT increase intended to finance the 13th AVS pension. The first payment, expected at the beginning of December, will involve 2.7 million people: for them it will be the first payment of the 13th AVS, which in March 2024 obtained 58% of the votes.

The 13th AVS pension will involve an annual expense of more than 4 billion francs. To finance it, Parliament has decided to increase VAT from 2028 by a narrow margin: the normal rate would rise from 8.1% to 8.5%, i.e. by 0.4 percentage points; the special rate for the hotel sector would go from 3.8% to 4%, while the reduced rate would remain at 2.6%.

The measure clearly divides the political landscape: the centre-left and the Federal Council are lining up in favor of yes. During the "60 Minutes - Direct Democracy" debate, broadcast on Monday evening, Bruno Storni of the PS underlined the need to finance an annual performance of more than 4 billion francs.

Bruno Storni of the PS explained that the 13th AVS involves annual disbursements exceeding 4 billion and that, consequently, it is necessary to provide for its financing.

For Sabrina Gendotti of the Centre, the increase is not the best solution, but the only one available; he recalled that proposals such as increasing the retirement age and salary contributions had been rejected. The UDC and FDP are against the measure. Simone Gianini of the FDP contested the request for new taxes two years after the vote and in a period of rising prices; the National MP proposes cuts to public spending and structural reforms of the pension system.

The measure decided by Parliament

The proposal includes three rates: the normal one, the special one for the hotel sector and the reduced one for certain goods. The increase in the first two should ensure around 1.4 billion in additional revenue every year, leaving the reduced rate on basic necessities unchanged.

Operational details

Rates and the cost of living

Comparing the rates with the federal estimates allows the proposal to be viewed both from a tax perspective and in terms of household spending. The increase in the standard rate from 8,1% to 8,5% corresponds to the 0,4 percentage points indicated in the proposal. For the hospitality sector, however, the rate would rise from 3,8% to 4%. The reduced rate would remain at 2,6%.

Among the goods subject to the reduced rate, the source mentions foodstuffs and medicines, as well as hygiene products, newspapers and books, and certain goods and services in the agricultural sector. For these categories, the rate would remain unchanged, while increases are planned for the other two rates.

Estimates for households

According to the federal estimates reported by the source, the monthly impact increases with the income brackets listed:

The simple mathematical conversion over twelve months brings these figures to 84 francs, 156 francs and 336 francs per year, respectively. These are annualized versions of the monthly estimates, not new separate figures indicated by the Confederation.

In the debate, Bruno Storni also presented another comparison: 180 francs a year compared with the 2'000 francs from the 13th AVS pension that will be received. The source does not link the 180 francs to one of the three income brackets, so the figure should be retained as an amount cited in the political comparison and not assigned to a specific household.

Swiss VAT would remain at 8,5%, according to Storni, far below the 20-22% in neighboring countries. The comparison places the national rate in relation to those indicated for other countries, while the household estimates describe the monthly spending associated with the income brackets. Together, the two comparisons show the different dimensions of the debate on the cost of living without assigning them the same function.

Key points

The alternatives and the federal vote

The UDC proposes to look for savings in public spending, citing sectors such as the reception of asylum seekers. Tiziano Galeazzi of the UDC claims that billions can be found where one spends without clear benefits. The centre-left replies that these solutions would not find a majority in Parliament.

In the debate Bruno Storni argued that the FDP and the UDC rejected the alternative proposals. Among those he indicated were an inheritance tax, a possible tax on financial transactions and an increase in wage contributions. The source presents them as options discussed and rejected, not as measures taken to finance the 13th AVS.

Broader reform remains to be discussed

On this point all participants agree: demographic aging will require further interventions. Simone Gianini claims that the system based on parameters from 50 years ago no longer holds up and proposes making the retirement age flexible, with targeted incentives and aid. Sabrina Gendotti, on the other hand, puts a small immediate loan before total uncertainty about the reforms to come.

Since a change to the federal Constitution is at stake, the vote on November 29 will have to obtain a double majority of the people and the cantons. The source does not report the outcome of the consultation and does not clarify how the part of the cost of the 13th AVS that exceeds the additional revenue, estimated at around 1.4 billion francs per year, would be covered.

For institutional reference on social security, the [AVS 2026 synoptic table] is available (https://www.ahv-iv.ch/p/2.01.i). To learn more about income, consult AVS and pension.

Source: rsi.ch