Everything You Need to Know About the Value-Added Initiative Vote

On May 18, voters in Zug will decide on the Value-Added Initiative and a counterproposal.

What is it about?

In spatial planning, each plot of land is assigned to a specific zone — such as building, agricultural, or protected zones. This zoning determines the land’s value. When the zoning changes, it can lead to a significant increase in value — for example, if a plot is newly designated for construction or if rezoning or upzoning allows for greater use. The value-added levy regulates how this increase in land value is shared between landowners and the public sector.

What is the current situation?

Under the cantonal Planning and Building Act (PBG), a value-added levy is currently only mandatory for new zoning (i.e., when land is newly made available for development). The rate is set at 20% of the increase in land value. For rezoning, upzoning, and development plans — known as the "optional area" — municipalities are currently free to introduce a levy of up to 20% in their building regulations.

Revenue from the value-added levy is used primarily to compensate for land that is de-zoned. It can also be invested in spatial planning measures, such as promoting affordable housing.

These regulations were approved by Zug voters in 2019 through a partial revision of the Planning and Building Act, aligning cantonal law with federal requirements that mandate a 20% levy on newly zoned land.

What does the initiative propose?

The initiative, put forward by the cantonal Social Democratic Party (SP), proposes increasing the value-added levy for new zoning from 20% to 30%. It also calls for a mandatory 30% levy on rezoning, upzoning, and development plans. Municipalities would have the option to raise this levy to a maximum of 50% in their building regulations.

The initiative introduces a tax exemption of CHF 500,000, meaning small parcels of land would be lightly taxed or exempt altogether.

How would the revenue be used?

According to the initiative, the revenue would be earmarked: at least half would have to be used to maintain and create affordable housing. The remaining funds would go toward projects benefiting the general public, such as neighborhood enhancements, recreational areas, or childcare centers.

What are the proponents’ arguments?

The SP sees the initiative as an effective tool to promote affordable housing — something urgently needed, given that rents in Zug are well above the Swiss average. They argue that without action, more residents will be forced to leave the canton.

The SP points to a 2022 study showing that the added value from ten large development sites in the city of Zug totaled around one billion Swiss francs. Currently, no mandatory levy captures gains from such revaluations.

They argue that the levy would also support housing cooperatives and encourage developers to create affordable units, since the levy could be paid partly through in-kind contributions. They dismiss fears that the levy would cause rents or property prices to rise, saying that land would still be valuable enough after the levy to make developments profitable.

What is the government's position?

The cantonal government and parliament believe the initiative goes too far. In October, parliament clearly rejected it by 58 votes to 17.

The government argues that the levy rates are too high, potentially discouraging investment in housing projects. They also contend the initiative would not create a real incentive for affordable housing because, legally, building affordable units cannot be counted as an in-kind contribution to offset the levy — something the initiative fails to account for.

Moreover, they warn that the CHF 500,000 exemption would increase administrative costs, as more cases would become subject to the levy.
 

Image: Stefan Kaiser (Zug, 11. 2. 2025)

What does the counterproposal suggest?

The counterproposal maintains the current 20% levy for new zoning but introduces a mandatory 20% levy for rezoning, upzoning, and development plans — compared to the 30% proposed by the initiative.

Originally, the government proposed making this optional for municipalities, but parliament ultimately opted for a mandatory approach.

The counterproposal also raises the tax exemption to CHF 1.5 million. It specifies that affordable housing must always be taken into account when calculating the levy. However, unlike the initiative, it does not prescribe a fixed minimum share of the revenue to be allocated for affordable housing. Instead, the revenue would go toward spatial planning measures, with priority given to promoting affordable housing.

Who supports the counterproposal?

The government and cantonal parliament recommend voting yes to the counterproposal and no to the initiative. Parliament passed the counterproposal by 42 votes to 34.

The SP also supports the counterproposal, saying it adopts the core elements of the initiative. A coalition from the political center — including members of The Centre (Die Mitte), the Green Liberal Party (GLP), and the Free Democratic Party (FDP) — as well as the Cooperative for Nonprofit Housing (Gewoba) also back it.

What are the arguments in favor of the counterproposal?

Supporters see the counterproposal as a fair, pragmatic, and balanced solution. They argue it creates incentives for affordable housing development because property owners could reduce the levy by offering affordable housing as an in-kind contribution.

They also highlight the clear, consistent rules for managing planning gains and the option to pay the levy either in cash or in kind. Additionally, the high exemption threshold of CHF 1.5 million ensures that small construction projects are not affected.

What do opponents say about both the initiative and the counterproposal?

The "No" committee — made up mostly of FDP and SVP members, along with some housing cooperatives and the Zug Chamber of Commerce — opposes both the initiative and the counterproposal.

They argue that any form of the value-added levy is an unnecessary financial burden that will drive up rents and property prices because landowners typically recoup their investment over decades through rental income.

They also criticize that housing cooperatives and foundations — key providers of social housing — would be unfairly taxed, calling the levy "regulatory madness."

Additionally, they warn that stricter requirements would make development plans less attractive, ultimately leading to fewer new housing projects. Lastly, they argue that mandatory levies undermine municipal autonomy, even though municipalities best understand their own local conditions.