Tax Aspects of Fiscal Federalism: The Swiss Confederation

Abstract:     
This paper is part of a comparative analysis of the distribution of the taxing authority among different levels of governments throughout a broad range of nations. Switzerland being a mere Confederation in the technical sense of the word for centuries before becoming a federal state, it may well be one of the most prominent nations when looking for the significance of federalism in today's systems of governments. The distribution of fiscal powers has always been a central topic in shaping the country's implementation of federalism. And indeed there may be a strong interdependence, or as a Swiss constitutional law scholar, Jean-François Aubert, has put it: 'Tell me what your financial constitution is and I will tell you what your federalism is.' The paper undertakes to analyze the distribution of fiscal powers from a legal, institutional point of view, focusing on the power to tax. Tracing the historical development, it outlines today's horizontal and vertical assignment of taxing power between federal, cantonal and communal authorities. In this context, both the systems for harmonization of the income tax levied on all three levels of government as well as for avoidance of double taxation are introduced.

Number of Pages in PDF File: 51

Keywords: tax, taxation, interstate taxation, fiscal federalism, federalism, power to tax, tax harmonization, constitution, income tax, Switzerland, Swiss Confederation, intrafederal taxation, intercantonal tax law, sub-central governments, cantons, state tax

JEL Classification: K34, E62, H20, H71, H77

Accepted Paper Series