The Federal budget ended 2019 with another high ordinary surplus of CHF 3.1 billion,versus the budgeted CHF 1.2 billion. The improvement was due in equal measure to higher receipts and lower expenditure. Withholding tax and direct federal tax, in particular, recorded an increase in receipts. VAT receipts remained below expectations.The Federal Council was informed about the provisional results at its meeting on 19 February 2020. At the same time, it determined the fiscal policy framework for the next budget process. The outlook for 2021-2023 is stable.
A surplus of 1.2 billion had been budgeted for 2019. An improvement was already discernible in both of last year’s forecasts, and this has been borne out by the figures.
Receipts for 2019 were up by 0.9 billion, or 1.2 %, on the budgeted figure. Increased receipts were recorded for withholding tax and direct federal tax on corporate profits (+1.3 billion and 0.5 billion respectively). The Confederation benefited from the good economic performance in 2018.
VAT receipts, by contrast, remained well below budget (-0.9 billion); this is attributable to the fact that nominal economic growth in 2019 lagged well behind the budget forecast (1.3 % instead of 2.7 %).
Expenditure came in at 0.9 billion, or 1.3 %, below budget; this is in line with the 10-year average. In particular, expenditure in the task areas of social welfare and security were considerably below the budgeted amount (-0.6 billion and -0.3 billion respectively). As regards the first of those task areas, this was above all attributable to migration, which saw a fall in the number of asylum applications. In the second area, this was due to defence expenditure. Only expenditure for finances and taxes was above budget (+0.3 billion), because the cantonal shares increased as a result of higher federal tax receipts.
Receipts of 541 million were recognised in the extraordinary budget. This concerns the proceeds from the auction of the 5G mobile radio frequencies (376 million), fines ordered by the Competition Commission (139 million) and additional receipts from the debt restructuring liquidation of Swissair (25 million). Including extraordinary receipts, the surplus came to 3.6 billion.
The results have not yet been audited by the Swiss Federal Audit Office (SFAO) and are therefore still provisional.
Fiscal policy assessment
During its meeting, the Federal Council also determined the fiscal policy framework for the new budget process. The updated figures for 2021 to 2023 show a structural surplus of 1.1 billion for 2021. In the legislature financial plan, a figure of 1.0 billion had been assumed. The outlook thus remains stable. This is also the case for 2022 and 2023. The reform of the taxation of couples and families (elimination of the penalty for married couples) has now been removed from the financial plan for 2023, since Parliament has referred the reform back to the Federal Council.
The financial plan does not include possible additional burdens that have not yet achieved the necessary planning status. These amount to around 1.5 billion in net terms for 2022 and 2023, which significantly exceeds the available leeway. They include, in particular, quantifiable tax reforms (e.g. increase in deductions for health insurance, reform of residential property taxation, abolition of stamp duty) but also the international corporate tax reforms under the aegis of the OECD, the effects of which are still unclear. Conversely, the additional profit distribution by the SNB will reduce the budget for 2020 and 2021. Nonetheless, even these receipts can offset only part of the possible additional burdens, which is why the Federal Council wishes to retain the current room for manoeuvre.