Swiss VAT hike sparks fierce debate over military funding and security costs
A debate over funding Switzerland's military has split political parties. The Center Party wants a temporary VAT increase to cover rising defence costs, while others argue over the best way to pay for security upgrades. The proposal follows years of disagreement since the Federal Council first suggested a tax rise in 2023.
The Center Party has pushed for a 0.8-percentage-point VAT hike over ten years to fund the military's 31 billion Swiss franc shortfall. Party president Philipp Matthias Bregy calls this a fair and democratic solution to Switzerland's worsening security situation. The plan would keep the reduced VAT rate and leave the special rate untouched, aiming to balance social impact.
Opposition comes from both left and right. The Greens reject the tax rise, pointing to the soaring costs of the F-35 fighter jet programme. The Social Democrats argue that better security can be achieved without extra spending on weapons. Meanwhile, the Swiss People's Party (SVP) and the Free Democrats (FDP) support a stronger defence budget but oppose the VAT increase as the wrong method.
The Green Liberals (GLP) have not ruled out the proposal entirely but remain cautious. They demand a closer look at whether the full financial request is justified. Public opinion has stayed firmly against the idea, with polls showing rejection rates between 55% and 65% since 2023.
After lengthy negotiations, Parliament reached a compromise in 2025. The original 0.8-point hike was scaled back to 0.3 points, lasting until 2030. The SVP maintained strong opposition, while the FDP and Liberals softened their stance. The Social Democrats, initially supportive, accepted the adjusted plan. By early 2026, the deal passed narrowly.
The VAT increase will now fund part of Switzerland's military upgrades until 2030. The final agreement reflects a shift in political positions, though public resistance remains high. The compromise ensures some additional defence funding while limiting the tax burden on households and businesses.
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