Canton Zug, known for its exceptionally low taxes, plans to reduce taxes for its residents.
Canton Zug, known for its very low taxes, has confirmed a tax reduction plan following a referendum on November 26. The move, approved by 72.3% of voters, aims to ease the financial burden on residents. Critics argue it mainly benefits high earners, while supporters claim it will assist families and entrepreneurs.
Zug residents strongly support a tax reduction
During the recent vote, 72.3% of citizens supported the eighth revision of Zug’s tax law, leading to changes in tax returns and a “moderate” reduction in cantonal income tax. This change is particularly targeted at those with lower incomes and is expected to take effect in the 2024 tax year.
It’s important to note that Zug already boasts the lowest personal taxes in Switzerland. Residents with an average Swiss salary of 80,000 francs annually currently pay around 3.2% of their income in communal and cantonal taxes. This is significantly less than in other cities like Zurich (9.2%), Bern (13.7%), Geneva (13.8%), and Lausanne (14.27%). The attractiveness of Zug’s low taxes has led to some attempting to register illegally for lower rates.
Zug’s tax plan includes provisions for childcare allowances and adjustments to wealth taxes.
The tax plan also includes provisions to benefit those caring for children with increased tax deductions for childcare services and family allowances. Property taxes are set to undergo changes, including doubling the tax allowance limit for property-related costs. Additionally, the cantonal wealth tax is expected to decrease for individuals with assets exceeding 250,000 francs, along with other deductions for businesses.
Heinz Tännler, the cantonal finance director, assures that the tax cut is financially viable and will benefit all Zug residents, particularly medium-sized businesses.
Critics contend that reducing taxes will worsen the housing crisis.
However, not everyone supports the tax cut. Opponents, including Luzian Franzini of Alternatives – Greens, argue that it will make Zug more attractive for the wealthy and worsen the housing crisis. Opposition parties (SP, ALG, and CSP) claim that reducing taxes further will reinforce Zug’s image as a tax haven, displacing middle and lower-income residents.
They argue that the tax cut will stimulate demand, leading to increased rents and less living space, exacerbating the existing housing crisis. Heinz Tännler counters these claims, stating that the housing crisis should be addressed through clever spatial planning, simplified building permit procedures, and a more investor-friendly environment, rather than linking it solely to tax cuts.
