Cantonal director of finance rules out increase in taxes

Despite the fact that a deficit of CHF 131.9 million is expected for the next financial year, the cantonal government has announced that an increase in taxes is out of the question “for the time being”.
 
The canton of Zug has been in economic doldrums since 2013. While the current programme of cutbacks is having a positive effect, it has still not been able to return to being in the black. “We still have a structural deficit of CHF 100 million,” admitted Heinz Tännler, the cantonal director of finance to representatives of the press on Wednesday, as he added how further cutbacks would be necessary.
 
Despite reserve funds of some CHF 900 million, the director of finance announced that these were “melting like snow in spring”. “What we need to do now is react to ensure the deficit does not get any worse,” he said, as he went on to explain that the canton had outgoings of CHF 1.47 billion, compared with an income of CHF 1.34 billion.
 
Indeed, it has now been some years since the canton has been able to pay its way through its current account. While more income from taxation would be in the offing, additional expenses have been incurring through having to look after so many asylum-seekers, not least in the provision of staff to look after them. On this aspect, the director of finance is not calling for the Department of Inner-Cantonal Affairs to cut back in this area, as the matter is, of course, beyond its control. In addition to this, there is the ever increasing amount the canton has to pay to the National Equalisation Fund, which next year is expected to amount to CHF 341.3 million. “Sooner or later, we will be expected to pay CHF 400 million, which, quite frankly, we just will not be able to afford,” he said. “The only hope here is that the way these sums are worked out will be amended and that the cantons which benefit from the fund will be satisfied with less.”
 
As mentioned, Tännler wants to avoid a rise in taxation for the time being, at least until the individual cantonal departments have done their homework and earmarked areas for cutbacks. Only if these cannot clear any deficit would he consider imposing an increase in taxation. “Anyone who tells me we should stop any further cutbacks should look at the situation in the neighbouring canton of Schwyz.” It was here, where, last weekend, 70% of voters rejected the introduction of a flat-rate tax with which the canton had hoped to balance its budget, the reason for it failing being on account of the additional financial burden it would have placed on those on lower and middle incomes. Furthermore, the canton (of Schwyz) saw its own reserves of some CHF 500 million dwindle to nothing over a period of a very few years.
 
“We want to avoid a crash-landing situation such as has occurred in Schwyz at all costs,” he said. “For us here in Zug this is just a “no-go” area. I shall not be wasting one minute of my time even contemplating it.”