ZURICH: The current rate of 8% is set to drop on 1 January 2018. Temporarily increased by 0.4% in 2011 to shore up funding for disability welfare, the rate will revert to 7.7%. The 0.1% difference between the new rate and pre 2011 rate of 7.6% is a new increase that will be used to help finance rail infrastructure. Switzerland has three VAT rates: a standard rate (8%), a hotel rate (3.8%) and a reduced rate (2.5%). From 1 January 2018, these will fall to 7.7%, 3.6% and 2.5% (unchanged).
The recent pension reform referendum aimed to use the extra VAT revenue to boost funding of pensions, however the vote failed. The extra 0.1% to fund rail infrastructure is a move decided by a referendum in 2014. A 0.1% increase might sound trivial, but it is expected to raise an extra CHF 300 million per year.
Consumer advocates are concerned savings from the new rates, estimated at CHF 900 million per year, will not be passed on to consumers. Speaking to the newspaper Le Temps, price watch dog Stefan Meierhans, known also as Mr. Price, called on retailers to ensure consumers benefited from the fall.
