A no to the OECD minimum tax should enable a fairer version of this bill: That’s what the opponents of the voting proposal of June 18 say. Fabian Molina explains it in an interview.
This content was published on April 21, 2023
swissinfo:ch: Fabian Molina, the OECD taxes multinational corporations uniformly, and Switzerland is participating. As a leftist you should cheer. What bothers you?
Fabian Molina: Basically, it is a success that there is an international minimum tax. The problem is that by implementing this OECD reform, Switzerland is doing the opposite. Instead of the population, a few large corporations continue to benefit.
As the?
It has created loopholes in past tax reforms. One is the so-called Step Up, introduced in 2019. With this, hidden reserves can be uncovered and profits can be taxed at a reduced rate.
The other is this capital contribution principleexternal link, in force since 2011. It allows companies to let their shareholders participate in the profits without incurring any tax. According to federal estimates, this instrument alone cost the state between 3.6 and 4.8 billion francs between 2011 and 2018.
And these loopholes will not change with the OECD minimum tax. If the big corporations have to pay more taxes, they make up for it with the two instruments.
Nevertheless, well over a billion more taxpayers’ money is accrued…
This is only an estimate. However, we know that most of this additional income will go to the cantons of Zug and Basel-Stadt. The canton of Zug, for example, has already announced that it will use the money for tax cuts for the richest. Corporations should also benefit from the so-called location promotion.
Worse still, if the cantons in which the corporations are based receive most of the additional tax revenue back, this will further fuel tax competition between the cantons. And if the additional income mainly benefits two cantons, then that is extremely unfair for the population.
After all, the money stays in Switzerland. The left should like that too, right?
The income must benefit the population in Switzerland and in the countries of origin. The companies affected are usually hardly active in Switzerland. For example, there are commodity groups that shift their profits from the Global South to Switzerland. This levy remains. With the tax rate of 15 percent, only a bottom was created, but it is far too low.
They fought in parliament to ensure that part of the profits flow back to the Global South. Bring that back if the people reject the bill?
Yes. As I said, we are not opposed to Switzerland implementing the OECD reform, on the contrary: we were fighting for a global minimum tax. But global also means that things should be fair between North and South. The present implementation falls short of these goals.
Where would you start after a no on June 18th?
First: Close existing loopholes. It must not be the case that corporations use other instruments to avoid taxes. Second, the additional income must be distributed fairly across the country. This means that the federal share must be increased significantly. And thirdly, as mentioned, part of the federal share must flow back to the Global South.
With a no, however, Switzerland is under time pressure and it swerves internationally again. Can she afford it?
According to the current timetable, Switzerland would have at least a year left. In addition, Switzerland would opt out for reasons of international conformity. Now it’s like she only does the bare minimum. Switzerland does not do justice to the sense and spirit of the reform, international tax justice.
In any case, Switzerland showed no solidarity in this dossier. Together with other low-tax countries such as Luxembourg or Ireland, she has campaigned for the OECD minimum rate to be very low at 15%. A much higher rate of 21% was originally targeted.
And now Switzerland is trying – with insufficient implementation – to appear internationally compliant. The country’s unique selling point, the lowest group taxation, will be retained.
What would be a fair tax rate for corporate profits?
It would have to be 30 percent or more.
But the low-tax strategy that you criticize also brought prosperity and social justice to the country. Doesn’t that resonate with you?
Switzerland has long relied on immoral business practices. First on bank client confidentiality. Then, when this no longer worked, capital was lured into Switzerland via the tax rate and money laundering laws were laxed.
The war in Ukraine showed how much dirty money Switzerland had amassed from Russian oligarchs. This attitude is no longer accepted internationally. It is a question of global justice that Switzerland is changing its business model, but also a question of acting with foresight.
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