While many national governments, such as the US and UK, regularly spend more than they collect, Switzerland managed a CHF 2.8 billion surplus in 2017. In addition, CHF 2 billion of withholding tax is expected, which would push the surplus up to CHF 4.8 billion.
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Most of the CHF 71 billion collected came from VAT (29%) and federal income tax (32%). Other big contributors were withholding tax (12%) and fuel tax (6%).
At around 21% of GDP, Switzerland’s federal government ended 2017 with a relatively low level of debt. This increased modestly to CHF 105 billion by the end of 2017
Switzerland has three layers: federal, cantonal and municipal and debt can exist at all of these levels. Cantons in particular can have high levels of debt. For example, the canton of Geneva, one of the most indebted, carries substantial debt. At the end of 2016, the canton had debts of CHF 13 billion, equal to 142% of GDP. In January 2018, the rating agency Standard and Poors gave Geneva a negative outlook citing risks related to the canton’s poorly funded pension scheme.
What might Bern do with its budget surplus?
There are plenty of ways it could be used. The federal government mentions future spending on roads, security and asylum. In addition, it points out the financial head winds of future pension and tax reform.
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