Super low-tax Canton Zug to cut taxes on residents

Super low-tax Canton Zug to cut taxes on residents

In a statement, authorities in Zug have confirmed that they will be cutting taxes in the canton following a referendum on the idea on November 26. Supporters promised the measures would assist families paying for childcare and better compensate entrepreneurs, while critics have argued the proposal will only benefit high earners.

Zug votes overwhelmingly to cut taxes

At the vote last Sunday, 72,3 percent of voting citizens approved a plan to cut taxes in Canton Zug. The proposal, the eighth revision of the tax law in Zug, will lead to a number of changes to tax returns, which should ease the financial burden on all residents. 

Authorities have promised a “moderate” reduction in the cantonal income tax placed on salaries, especially for those on lower incomes. The move is expected to come into effect from the tax year 2024.

Bear in mind that the canton already has the lowest personal taxes in Switzerland, with a person in Zug on an average Swiss salary (80.000 francs a year) having to pay roughly 3,2 percent of their income towards communal and cantonal taxes - dramatically less than the same person in Zurich (9,2 percent), Bern (13,7) Geneva (13,8) and Lausanne (14,27). The low taxes have even led some to list fake properties to rent so that people can re-register in Zug illegally to benefit from the lower rates. 

Childcare allowance and wealth taxes part of Zug tax plan

As part of the plan, those caring for children should be able to benefit from more generous tax deductions related to childcare services and the family allowance. Property taxes are also set to be overhauled, with the tax allowance limit on property-related costs like mortgages and repairs set to be doubled. The cantonal wealth tax is also expected to be cut for anyone with assets over 250.000 francs, alongside other deductions for businesses.

“The various adjustments result in a financially viable and balanced overall package that benefits all tax-paying Zug residents,” noted cantonal finance director Heinz Tännler (SVP). In a statement, he confirmed that the canton would be able to afford the tax cut, which he argued "benefits everyone in Zug, especially medium-sized businesses.”

Opponents argue cutting taxes will exacerbate housing crisis

Others are not so keen, with Luzian Franzini, co-president of the Alternatives - Greens telling that “with the tax revision now decided by the people, the canton of Zug will become even more attractive for the rich and super-rich.” During the campaign, opposition parties (SP, ALG and CSP) argued that the plan to cut taxes even more would reinforce Zug’s image as a tax haven and further displace middle and lower-income residents. 

They added that reducing the tax burden would only make the housing crisis worse by stimulating demand even more, leading to rising rents and less living space - a recent report by Comparis found that a studio flat in Zug can already cost up to 3.100 francs a month. “Although the connection between tax cuts and housing cost increases is known, we have not succeeded in getting our arguments across,” admitted opposition body Allianz in a statement.

In response, Heinz Tännler said that the “population recognised that this argument falls short” and is too simplistic, making the point that Swiss cities in cantons with higher taxes, like Zurich and Geneva, also suffer from acute housing shortages. Instead, he argued that the canton’s housing crisis should be solved through “clever spatial planning, simplified building permit procedures and a more investor-friendly environment.”

Jan de Boer


Jan de Boer

Jan studied in York and Sheffield in the UK, obtaining a master's in broadcast journalism and a bachelor's in history. He has worked as a radio DJ, TV presenter, and...

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