End of municipal business tax in Geneva

Geneva's Grand Council has voted unanimously to abolish municipal business tax. This decision is the result of an initiative launched by young members of the right-wing parties, aimed at abolishing this tax, which is unique in Switzerland and was introduced by Napoleon in 1798, formerly known as «la contribution des patentes». To make up for the tax loss caused by this decision, tax on company profits will be increased.

What are the implications of this new measure?

An obsolete tax:
Local business tax was calculated on the basis of the number of employees, turnover and the amount of rent paid by a business. The Grand Council recognised the need to simplify the tax system.

Offset against income tax :
The financial losses for the communes are estimated at around CHF 200 million. This is the purpose of the proposed counter-proposal: to increase corporate income tax from 14 % to 14.7 %, to compensate for the expected tax losses, or even more.

A balanced solution:
Many MEPs saw a higher tax on profits as a more logical alternative. Socialist Thomas Wenger pointed out that 60 % of SMEs currently pay no tax on profits, justifying this choice.

Nathalie Fontanet, the State Councillor responsible for Finance, acknowledged that the initiative could have been a disaster for the communes, and hailed the counter-proposal as a measure that safeguards tax revenues and satisfies all parties concerned.

Administrative simplification :
As well as preserving revenue, the counter-proposal also brings benefits in terms of administrative simplification. Stefan Balaban of the Libertés et justice sociale group pointed out that this would be of particular benefit to the canton's 25,000 self-employed people. François Baertschi of the MCG also noted that the communes would benefit from a simplified administrative situation thanks to this decision.

The abolition of municipal business tax in Geneva marks an important step towards simplifying the tax system and preserving revenue for municipalities. By replacing this obsolete tax with an increase in profits tax, the Grand Council has found a balanced solution that meets the needs of businesses and municipalities. The decision is also welcomed for its contribution to administrative simplification and support for the self-employed.

Source : Rts. Genève supprime la taxe professionnelle communale, 12 May 2023.