National Financial Compensation

The canton of Lucerne will receive CHF 136 million from the National Financial Compensation (NFA) in 2021. There is also money for the canton of Uri. On the other hand, Zug, Obwalden and Nidwalden, as well as the canton of Schwyz, will have to dig deeper into their pockets.

The Federal Financial Administration (Eidgenössische Finanzverwaltung) has announced the compensation amounts for the cantons in 2021 according to the National Financial Compensation (NFA: in German: Nationaler Finanzausgleich). The donor cantons in Central Switzerland are Zug, Schwyz, Nidwalden and Obwalden, while Lucerne and Uri receive money from the NFA.

Zug: "We expected an increasing trend”

In 2021, the canton of Zug will pay CHF 330.939 million into the National Financial Compensation. This is clear from a press release from the Federal Department of Finance. The canton of Zug is thus paying CHF 1.221 million more than it did this year. Per capita, Zug's payment into the NFA 2021 amounts to CHF 2,654, which is CHF 31 less than in the current year. Looking at the resource index, it becomes clear why the NFA payments are increasing. The index for 2021 shows 253.7 index points for the canton of Zug, an increase of 4 points compared to 2020 (249.7). "The canton of Zug has once again grown above average compared to the other cantons, which is why the resource index, consisting of sums of the relevant income, wealth and profits for the reference year, increased by 4 index points to 253.7 (+1.6%)," explains Heinz Tännler, Finance Director of Zug.

The years 2014, 2015 and 2016 are relevant for the 2020 Resource Index, while the 2021 Resource Index will consider 2015, 2016 and 2017. "This means that – despite the deficit –  the canton of Zug performed above-average in 2017, and thereby has to pay a higher share into the NFA pot in absolute terms," says Tännler. This increase can be observed for both natural and legal persons.

Per capita contribution in the canton reduced
If we look at the amount per inhabitant, it can be seen that it will reduce from CHF 2,685 to CHF 2,654. "On the one hand, this means that the population in the canton of Zug has grown proportionally more than the resource index," says Heinz Tännler.

"On the other hand, and this is important, the NFA compromise is now having an effect, and leading to some relief of the donor cantons."

2021 is the second transitional year of the 2020 Financial Compensation Reform. The minimum level will be reduced to 87.1 percent of the Swiss average in 2021. This in turn has an impact on the level of the donation. The financial consequences of the Financial Compensation Reform will be mitigated, and this instrument will be used from next year. "The cushioning programme has no effect on the canton of Zug," explains Heinz Tännler. "The Confederation will make compensation payments to the receiver cantons in order to compensate for the negative effects of the Financial Compensation Compromise on these cantons. The donor cantons will not be affected."

At present, it is not possible to estimate whether the Corona crisis will leave its mark on the finances of Zug. "The NFA changes are based on relative changes in cantonal resource strengths. A corona-related change would have its origins in the influence of the Corona crisis on the resource strength of the individual cantons," says the finance director. "Any corresponding shifts are not yet quantifiable. Due to the calculation mechanism, any change will have an effect over a period of three years, with a delay of four years."

Tännler also assumes that the trend of NFA payments for Zug is likely to continue to increase: despite Corona. "We assume that the trend is increasing, due to the continuing relatively good development of the canton of Zug, which is generally pleasing., reliable estimates are currently not possible, however."