Switzerland announces second stimulus plan
BERN - Switzerland announced a second, two-point, economic stimulus package on Wednesday, including tax relief and CHF 700 million (EUR 464 million, USD 600 million) to advance infrastructure projects and Swiss exports.
The economy ministry said the stimulus would include federal investment in modernisation projects for road and rail transport networks, in energy and environmental infrastructure, housing, research, and marketing for the country’s key tourism industry.
Those measures were primarily aimed at giving a more immediate boost to the declining economy beginning in 2009 but will be accompanied by fiscal measures aimed at the longer term, the ministry added in a statement.
The government unveiled tax relief aimed at saving taxpayers CHF 400 million in 2010 to stabilise the economy in the medium term in case the economic downturn persists, the ministry said.
Existing plans to reform taxation for families should now be introduced by the beginning of 2010.
The overall fiscal package is expected to reduce federal government revenues from direct taxation by CHF 600 million.
A "clear correction" in terms of pursuing public debt reduction was necessary "for the coming years" because of the deterioration in the economic climate and the tax reforms, the ministry said.
But because of economic uncertainty, the government, the Federal Council, said it would only finalise its budget plans in June.
Federal authorities are legally bound to limit debt unless there is a severe recession.
Economy Minister Doris Leuthard said in January that long-standing plans to increase Value Added Tax may be reversed, leading to a cut in VAT instead to boost consumer spending during the crisis.
"All options are being looked at", the head of the ministry’s economic policy division, Aymo Brunetti, said.
Exporters will also benefit from changes to export credit guarantees to ease access to finance, while government compensation for short-time working will be extended to a maximum of 18 months instead of the current year.
In November 2008, the economy ministry announced a CHF 890 million economic package, mainly to boost corporate investment, to help hold back the effects of the global financial crisis.
The Swiss government later called for more support for the economy.
Switzerland’s unemployment rate increased to its highest level since 2007 in January at 3.3 percent.
Meanwhile, the export-dependent Swiss economy is widely predicted to enter recession in the current quarter after slowing sharply in the second half of 2008.
[AFP / Expatica]