Swiss VAT to rise 0.7 percentage points to fund pension increase

People walk along the Leman shores in the commercial and financial District in Geneva·Reuters
Reuters
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ZURICH (Reuters) - Value added tax (VAT) in Switzerland should be hiked by 0.7 percentage points in order to fund an increase in pensions for the elderly scheduled to take effect from 2026, the government said on Friday.

The plan to grant pensioners a 13th monthly payment annually was backed by Swiss voters earlier this year.

Announcing the planned VAT hike after a meeting of the Federal Council, the government said the extra pension payment would cost around 4.2 billion Swiss francs ($4.96 billion) in 2026.

The VAT plan should keep the reserve fund underpinning old age pensions in balance until 2030, the government said.

Switzerland's normal rate of VAT is currently 8.1%, though there are also lower rates for some goods and services.

($1 = 0.8470 Swiss francs)

(Writing by Dave Graham, editing by John Revill)