On 28 November 1993, Switzerland votes on a reform as technical as it is decisive: replacing the old turnover tax, dating from the Second World War, with a European-style value-added tax (VAT). It is the fourth attempt — voters had rejected the idea in 1977, 1979 and 1991.
The context is that of a country seeking its bearings, a year after the «no» to the European Economic Area. Federal finances are under pressure; the turnover tax — which hits only goods, not services — is deemed outdated and poorly compatible with the European single market. The decree on the financial regime provides for VAT from 1 January 1995, at an initial rate of 6.5%.
This time a broad front backs the reform: the Federal Council, almost all governing parties (CVP, FDP, SP, SVP), business and the unions. Facing them, a motley opposition unites the Freedom Party (Auto-Partei), the Lega, the Labour Party and the Swiss Democrats, decrying a new tax bound to climb endlessly.
The verdict is clear-cut: 66.66% Yes and 22 of 23 cantons, with only Valais opposed. VAT takes effect in 1995. Three decades later it has become one of the Confederation's main revenues — and has indeed been raised several times.
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▲ Cantons that accepted
Zurich, Bern, Lucerne, Uri, Schwyz, Obwalden, Nidwalden, Glarus, Zug, Fribourg, Solothurn, Basel-City, Basel-Country, Schaffhausen, Appenzell Outer Rhodes, Appenzell Inner Rhodes, St. Gallen, Graubünden, Aargau, Thurgau, Ticino, Vaud, Neuchâtel, Geneva, Jura (22 of 23 cantons)
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▼ Cantons that rejected
Valais (sole opposing canton)
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Actors and personalities
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▲ Yes camp
• Federal Council (in favour of the reform) • Parliament (National Council 98 for, Council of States 38 for) • CVP, FDP, SP, SVP , Liberals, EVP, EDU, Ring of Independents • Swiss Trade Union Federation , Vorort and business
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▼ No camp
• Swiss Freedom Party (Auto-Partei) • Lega dei Ticinesi • Labour Party (PdA) and the Swiss Democrats • Restaurateurs' association ; the Greens leave the vote free
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Arguments and verdicts
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▲ Arguments FOR (Yes camp)
Modernise an outdated tax, EU-compatible
« The turnover tax hits only goods, ignores services and isolates us from our neighbours: VAT is the norm in Europe. »
— «Yes to VAT» committee, 1993 ✓ Argument confirmed
Introduced on 1 January 1995 at 6.5%, VAT replaced the turnover tax and adopted the European model (taxing goods and services, input-tax deduction). It is today one of the Confederation's main revenues, bringing in over 25 billion francs a year.
Source : FTA; FSO
A simple, transparent tax
« VAT will bring clarity and simplicity to the Swiss tax system. »
— Reform's supporters, 1993 ✗~ Partly refuted
VAT did modernise the system but soon became known for its complexity: three different rates (standard, reduced, special accommodation) and numerous exceptions fed thirty years of recurring debate over its simplification.
Source : FTA, VAT simplification reports
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▼ Arguments AGAINST (No camp)
Once introduced, VAT will rise endlessly
« This new tax will become a ratchet: 6.5% today, far more tomorrow. »
— Freedom Party / Lega, 1993 ✓~ Partly confirmed
The rate was indeed raised six times: 6.5% (1995), 7.5% (1999, AHV/IV), 7.6% (2001, NRLA funding), 8.0% (2011, IV), 7.7% (2018), then 8.1% (2024, AHV). The upward drift held — yet Switzerland keeps the lowest standard rate in Europe, far from the feared «explosion».
Source : FTA, VAT rate history
A regressive tax weighing on modest households
« VAT hits everyone's consumption equally, regardless of income. »
— Labour Party, 1993 ✓~ Partly confirmed
VAT is by nature a regressive tax, weighing proportionally more on low incomes. The point remains valid — but a reduced rate (2.5%) on food, medicines and essentials softens its most unfair effect.
Source : FTA; FSO
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Factual record
1 Confirmed | 2 Partly confirmed | 1 Partly refuted | 0 Refuted |
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VAT, a pillar of federal finances
Three decades after its introduction, VAT brings in over 25 billion francs a year and is one of the Confederation's two main revenues. The Yes camp's central argument — durably securing federal finances — was fully borne out.
Source : FTA; FSO
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A steady rise, as opponents feared
From 6.5% (1995) to 8.1% (2024), the rate was raised six times, mostly to fund the AHV, IV or NRLA. The No camp's fear of an ever-rising tax was partly realised, even if Switzerland keeps the most moderate rate on the continent.
Source : FTA
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A tax grown complex
Promised simple, VAT proved highly technical: three rates, numerous exemptions and famous borderline cases fed a permanent debate on simplification, still topical today.
Source : FTA
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In hindsight, the 28 November 1993 vote appears as a successful structural reform. VAT modernised a wartime tax, aligned with the European standard and became a pillar of federal revenue. Most of the Yes camp's promises materialised.
The opponents were not entirely wrong, though. Their main forecast — a rate bound to rise — was borne out six times in thirty years. But the drift stayed moderate by European standards, and the feared «tax machine» did not explode. The tax's regressive character, however, remains a reality that reduced rates only partly correct.
One blind spot of both camps: no one foresaw that this «simple» VAT would become one of the country's most technical taxes, the object of a permanent simplification project. Thirty years on, VAT is firmly entrenched — and just as firmly debated.