After years of passionate debate, the Swiss Parliament is close to finalizing the abolition of the Eigenmietwert, the theoretical rental income homeowners must declare for their residences. On Wednesday, the Ständerat (Council of States) voted 22 to 15, with six abstentions, to back the Nationalrat's (National Council) proposal for complete abolition, affecting both primary and secondary residences. This vote marks significant progress for homeowners who have long viewed this tax as unfair.
The Eigenmietwert, often misunderstood, refers to the hypothetical rent homeowners could earn if they rented their property instead of living in it. Homeowners must include this value as income, which has been particularly burdensome for many, especially retirees and those on fixed incomes. According to the proposed plan, almost no deductions for mortgage interest will be allowed, which critics argue could worsen financial pressures on homeowners.
This agreement was unexpected, especially considering the Ständerat's earlier reluctance to abolish the Eigenmietwert on secondary residences, fearing significant revenue losses for many cantons known for tourism. The Nationalrat had insisted on complete abolition, arguing it was unjust to retain such taxes. Negotiations dragged on for years, with conflicting ideas on how best to reform the tax system.
The turning tide came during the final negotiations, leading to comments from prominent political figures. "After years of penalty shootouts, we finally get to the final,” remarked Pirmin Bischof, the commission spokesperson, emphasizing the importance of reaching consensus. Under the agreement, the Swiss Federal Tax Administration would introduce a new object tax on second homes to mitigate the revenue losses anticipated from abolishing the Eigenmietwert. This measure, intended to address the concerns of cantons heavily reliant on tourism, aims to provide some financial relief.
The political maneuvering and compromises have drawn mixed reactions. While supporters hail this as significant progress, opponents caution about the ramifications of eliminating the Eigenmietwert. Notably, members of the political left, including the Social Democrats and the Greens, argue the plan will disproportionately benefit wealthier homeowners at the expense of renters. 'This reform risks putting renters on the losing side,' said Samuel Bendahan, co-chair of the SP parliamentary group, referencing the estimated 1.67 billion Swiss francs losses for federal and cantonal governments.
The aftermath of the Ständerat's approval did not pass without contention; several members expressed fears of public backlash. Stefan Engler, representing the interests of mountain cantons heavily dependent on tourism, voiced concern over potential losses. “We are heading toward a referendum under which many participants may see this as something entirely different than we intended,” he noted. The referendum could decide not just the fate of the Eigenmietwert but also whether the new object tax is approved. Political analysts expect considerable debate surrounding the public vote likely scheduled for September.
Complicators remain. To fully implement these changes, both the public and the cantonal governments must approve the introduction of the object tax, necessitating constitutional amendments. Last week, the Ständerat had expressed skepticism about the new tax, reflecting the strong opposition from many cantons. Before reaching this juncture, two prior attempts to abolish the Eigenmietwert had failed at the polls.
With this history hanging over negotiations, the likelihood of success remains uncertain. Some lawmakers argue the current system isn’t broken and should remain intact. The construction industry has also raised red flags, warning the new system could reduce the incentive for homeowners to invest in renovations and maintenance due to the removal of tax deductions for upkeep. This concern resonates deeply, especially within the construction community, which relies heavily on building renovations and maintenance projects.
Despite the opposition, enthusiasm for abolishing the Eigenmietwert remains strong among many homeowners. Advocates believe removing this tax could significantly ease financial strain, especially for lower-income and retired homeowners. Former property owners and members of the public have vocalized their experiences, drawing attention to their struggles under current tax policies. 'The Eigenmietwert is outdated and unfair. We shouldn't have to pay taxes on income we don't actually receive,' argued one homeowner.
Overall, the parliamentary proceedings culminate on Friday with the final vote still pending. Initial signals indicate broad support among parliamentarians, driven by the sentiment accrued from extensive discussions. Should the proposed changes pass this legislative hurdle, the real test will soon fall to the electorate, who will now have the final say on what could be one of the most impactful tax reforms for Swiss homeowners.
It’s clear from this complex saga, which has weaved its way through parliamentary discussions for nearly seven years, the abolition of the Eigenmietwert could usher in significant changes to the Swiss property tax system. The anticipated referendum stands as the final frontier—a battleground where popular sentiment will dictate the ultimate fate of these landmark reforms.
