Switzerland, as a direct democracy, organises about five referendums every year.  On Sunday, Swiss voters have rejected proposals to restrict immigration and to abolish the favourable tax regime for wealthy foreigners living in Switzerland.

The major issue in the referendum of 30 November was the initiative “Save Our Swiss Gold”, that would have obliged the government to increase its gold reserves, and to shore up the balance sheet of Swiss National Bank. The central bank would have had to increase its gold bullion holdings from eight percent level to 20 percent over the next five years. The bank would have had to repatriate its foreign-held gold reserves and be prohibited from selling any of those reserves in the future.

This proposal that was rejected with an overwhelming majority overshadowed the other two issues.

The immigration issue on was to limit immigration to some 17,000 people a year (currently immigration is about four times as important).

The tax issue was to eliminate special tax breaks for rich foreigners living in Switzerland. Over 5,000 people benefit from a tax regime know as the “forfait”, including  Formula 1 champions and Russian billionaires.

Forfait taxation

is based on the taxpayer’s actual annual living expenses (mostly housing costs) rather than on their income and assets. It is only available in certain cantons, and then only to foreign residents who are not ‘gainfully employed’ in Switzerland. In fact, less than one in a thousand Swiss taxpayers are taxed in this way, though they are naturally concentrated in certain areas.

Some 76 per cent of the 5,634 people using the system live in the four cantons of Vaud, Valais, Geneva, and Ticino. Most of the 2,000 wealthy French individuals who enjoy forfait taxation live in Vaud.  The French government has, therefore, withdrawn all treaty benefits from Swiss residents who pay forfait tax.

Bankers and the government had been warning that abolition will reduce tax revenues, lose jobs and reduce the appeal as rich foreigners leave Geneva and other French-speaking cantons.