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Switzerland’s Federal Council wants to introduce new measures to lower prices in Switzerland to curb cross-border shopping, something that it says hurts Swiss businesses.
Minister for Economic Affairs, Johann Schneider-Ammann, said in an interview with the newspaper Schweiz am Wochenende that he’s working on a package of measures to tackle high retail prices in Switzerland.
He thinks that if business costs are reduced prices will fall. In his view this is the best way to reduce Swiss residents shopping in neighbouring countries. To reduce costs the minister hopes to reduce bureaucracy and eliminate or lower technical trade barriers, requirements to change a product in some specific way for the Swiss market.
The minister would not be drawn into giving any specific examples.
The Federal Council, or cabinet, will look at proposals in a few months.
While reducing bureaucracy and technical trade barriers might help, there are other important aspects that might be worth investigating.
One Swiss consumer advocate, ACSI, points out that Swiss retailers already enjoy cost advantages over their neighbours. While rent and logistics costs might be a bit higher, lower VAT and employee costs are likely to make up for pricier rent and logistics. Swiss employee costs are lower because, while Swiss employees get paid more, social charges associated with salaries, such as AVS/AVH, are significantly lower in Switzerland.
Areas worth investigating would be retail competition and wholesale price differences on imported goods.
The price differences on imported magazines are suspiciously high. Are foreign publishers charging retailers in the home country one price and Swiss retailers another much higher price? For example a quick online search reveals the cost of a six month subscription to the French magazine Paris Match to be CHF 130 in Switzerland and CHF 72 (65 euros) in France – these are undiscounted kiosque prices. The Swiss price is 80% higher than the French one.
The current Swiss president, Doris Leuthard, once championed a new body of rules designed to remove protectionist trade barriers created under the guise of differences in product standards. Her work, which earned her the nickname “Madame Cassis de Dijon“, resulted in revised rules that came into force in 2010. Their impact on prices is the subject of much debate.
If it turns out that a lack of competition and steep wholesale prices on imports are the biggest problems, then tinkering with bureaucracy and technical trade barriers is unlikely to do much.
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