The tax reform should improve the Swiss debt market

Changes around income taxation will simultaneously reduce revenues to the federal budget by 750 million Swiss francs. This will not have any significant impact since the budget has reserves.

Given the current level of interest rates, it is expected that revenues will decrease by 165 million Swiss francs. The closure of the tax loophole will attract 35 million Swiss francs to the budget. By canceling the transfer stamp duty on domestic bonds, the Confederation will cut budget revenues by about 50 million from domestic bonds.

Making assumptions about how the level of income will change, you need to consider that:
• the base is on a limited data set;
• for the future, it is not clear what the level of interest rates will be.

There will likely be a significant increase in the number of transactions related to intragroup financing. This will strengthen the Swiss debt market.

Considering the proposed changes in dynamics, we can expect that the Confederation, cantons, and communes will receive additional budget revenues. Such reform will give the financial sector long-term sustainable prospects to create new jobs and increase value. In the dynamics, the ratio of costs and benefits acquired by the reform seems extremely successful.

The largest reduction in current revenue is initially expected by the Confederation budget. After five years, the proposed changes shall pay off.