Camilla Jessen
Switzerland is preparing a significant shift in how it finances its military, as officials warn that existing capabilities are no longer sufficient.
The Swiss government said on Wednesday it intends to temporarily increase the value-added tax to help finance higher defense spending, according to Politico. The Federal Council said the move reflects growing concern about the security environment facing the country.
“Given the deteriorating geopolitical situation, the Federal Council wishes to substantially strengthen Switzerland’s security and defense capabilities,” the government said in a statement.
It added that additional resources of around 31 billion Swiss francs, or roughly 33 billion euros, would be required.
Under the proposal, VAT would rise by 0.8 percentage points from its current level of 8.1%.
Ten-year tax increase
The planned VAT increase would apply for a decade, starting in 2028. The extra revenue would be channelled into a dedicated armament fund, which would also be allowed to borrow money to support long-term investments.
Because VAT rates are set out in Switzerland’s constitution, the measure cannot take effect without a constitutional amendment. The Federal Council said a public consultation on the proposal will be launched in the spring.
Any final decision would ultimately require approval through Switzerland’s direct democratic process.
Shifting defence stance
Switzerland has been reassessing its defence policy since Russia’s full-scale invasion of Ukraine nearly four years ago. While the country remains outside NATO and has no plans to join the alliance, it has explored closer military cooperation with European partners.
Defence spending in Switzerland currently stands at about 0.7% of gross domestic product, one of the lowest levels in Europe. The government previously set a target of raising this to 1% by 2032, but officials now say that goal has effectively been overtaken by events.
“As a result of savings achieved in recent decades, the armed forces are also insufficiently equipped, especially to effectively repel the most likely threats, namely remote attacks and hybrid conflicts,” it said.
According to the government, priority areas for future investment include short- and medium-range air defence systems, cybersecurity, and electromagnetic capabilities.
Sources: Politico
