Monday 06 June 2016 10:12 am

The curious case of Swiss referendums: Tunnels and trains win the day but tax changes shot down at the polls

By: Jake Cordell

Swiss voters rejected the much-hyped basic income proposal put to them in yesterday's referendum.

More than three-quarters of voters sided with the government and campaigners who warned the proposal to give every man and woman 2,500 Swiss francs (£1,773) a month was just too expensive.

The proposal was put forward by a Swiss businessman through Switzerland's form of direct democracy which allows citizens to propose ideas to go to a national ballot if they win the signatures of 100,000 members of the public – no small feat in a country with a population of eight million.

The popular initiatives are then put to the electorate in referendums every few months.

Read more: Why the Swiss model won't work for Britain after Brexit

To pass, a popular initiative must win both a majority of votes across the country along with a majority in more than half of Switzerland's 26 cantons. Yesterday's basic income proposal won 23 per cent of the nationwide vote and failed to secure a majority in any of the cantons.

Switzerland has a history of putting exciting and innovative proposals to a referendum, although recent polls have shown that the Swiss population at large are no fans of exotic policymaking. Often the most populist proposals that garner the most headlines don't carry the day.

Taxi for taxes

The rejection of the basic income proposal – although supported and opposed by people across the economic spectrum – comes after a number of losses for left-of-centre proposals that have been put to the Swiss since the financial crisis.

Plans to introduce a federal inheritance tax which would have slapped a 20 per cent tax on estates of more than two million Swiss francs and raise three billion Swiss francs were rejected last year. Proponents wanted to redistribute wealth and put the money raised towards funding pensions. Three-quarters of Swiss thought otherwise, and the proposal was emphatically killed off at the ballot box.

That vote followed failed attempts to introduce pay caps in the private sector, a new federal minimum wage and harmonise the taxation of Swiss and foreign nationals. 

Rejected

The pay cap proposal was put forward by the Young Social Democrats in 2013 who wanted to limit the pay of top executives to 12 times the lowest salary in the company. It was voted down by a margin of 65 per cent to 35 per cent after voters had only months earlier agreed to more mild executive pay reforms which gave shareholders a binding vote on pay deals.

Plans for a 22 Swiss francs an hour minimum wage – the highest anywhere in the world – were rejected by an even larger margin of 76 per cent to 24 per cent. The campaign split along fairly predictable lines. Unions and leftist parties backed the change, while businesses and mainstream politicians warned it would cost jobs. 

Even a proposal to tax wealthy foreigners was sent packing at the end of 2014 by the status quo-friendly electorate. The proposal on the table was to end the system whereby non-Swiss nationals paid a lump-sum depending on how much it cost them to live in the country, as opposed to an amount related to a proportion of earnings. 

No thanks, we're Swiss

In February, voters also rejected a proposal which would have ended the "marriage penalty" – which can discriminate against married couples as they have to file their tax bill jointly, rather than as individuals. In some circumstances, this can result in married couples paying more tax than they would if they were cohabiting.

After it emerged that the new system explicitly defined marriage as "between a man and a woman", campaigners hoping to make same-sex marriage available in Switzerland mounted a sustained attack on the scheme. The ballot was rejected by 50.8 per cent to 49.2 per cent.

Speculators welcome

The Swiss also voted in February to uphold the rights of financial institutions to bet on swings in the value of food, against a proposal put forward by the Young Socialists to outlaw banks buying-and-selling agricultural products on the money markets.

The proponents wanted to stop sharp rises in food prices, but the government said the move could drive several multinational commodities firms out of Switzerland. Once again Swiss rejected the populist call and heeded the government, voting 60 per cent against the plan.

Transport, please

While tax wheezes may not take their fancy, Switzerland seems more than happy to wave through some of the more mundane proposals which get put to them in quarterly referendum cycles.

A referendum on changes to "spatial planning" which earmarked the amount of land that could be developed on over the following 15 years, won a healthy 63 per cent of the vote back in 2012.

Voters also backed the headline-grabbing "federal decree on the financing and development of railway infrastructure" which outlined new railway projects and a long-term funding plan for the development of new freight and passenger routes in September 2014.

Adopted

And, while they were busy rejecting calls to ban food speculation, reform marriage taxes and enforce the deportation of foreign criminals in February, the Swiss did wave through a project to build a second tunnel between two Alpine towns. Advocates said the link between Goschenen and Airolo would cement Switzerland's place at the centre of Europe's land transportation network. Exciting stuff.

With populist plans and programmes floating across the world, the Swiss model – and its latest rejection of the universal basic income – may provide some insight into just how popular such initiatives really are.