Federal taxation: the Swiss Government appoints a USI Professor
Institutional Communication Service
19 November 2018
On the subject of income tax of natural persons at the Federal level, the issue of the so-called 'penalisation' of married couples with double income has been under discussion at for some time. Since last spring, the estimation method used by the Federal Tax Administration (FTA) has shown that there are about 454,000 couples concerned by the tax penalty, and not 80,000 as previously estimated. To address this issue, in June the head of the Federal Department of Finance (FDF), Federal Councillor Ueli Maurer, commissioned an external report on the FTA's estimation method and statistical data. Raphaël Parchet, assistant professor at the USI Faculty of Economics, was given the mandate. The results of his survey were published on November 7 (see attached FDF press release) and discussed them within the Federal Council.
According to the report by Prof. Parchet, the statistical basis available to the FTA for determining the Federal income tax is insufficient. As a result, the estimate of the number of people affected by the so-called 'marriage penalty' is therefore approximate. As Prof. Parchet affirms, "It is impossible to calculate exactly how many married couples are affected by the tax penalty, just as it is not possible to calculate the financial consequences of the proposed amendment to the Federal Act on Direct Federal Tax (Fair Taxation of Couples and Families)". The basic issue at stake is that the FTA currently does not have all the relevant information of citizens’ tax returns, which would be required to determine the Federal tax, including income and deductions of individual taxpayers. The Cantonal tax authorities have these data, but the FTA has little or no access to them.
In the wake of the report, the Federal Department of Finance has announced that it would examine measures to improve the FTA database. For its part, the FTA has decided that in the future certain estimates shall be submitted to an external expert for a plausibility check. "I hope that USI will continue to be involved in the process of evaluating and improving Federal policies," concludes Prof. Parchet.