Swiss 2019 financial statements: a pleasing surplus

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.