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Zurich Rules Out Corporate Church Tax Exemption

by Ulrika Lomas, Lowtax.net, Brussels
17 January, 2014

Zurich Cantonal Council has recommended that the popular initiative "less taxes for industry," or church tax initiative (Kirchensteuerinitiative), be rejected, by an overwhelming 123 votes to 40.

Submitted by the Young Liberals (JFZH), the proposal calls for legal entities in Zurich to be granted exemption from the controversial and archaic levy in future. The Young Liberals argue that the requirement for businesses to pay the charge violates religious neutrality. Furthermore, the JFZH insists that companies should have the right to independently decide whether or not to make a contribution.

Defending its decision, Zurich Cantonal Council highlighted the invaluable social and cultural contribution that the church community currently makes to society. Given the level of voluntary participation from church members, the state could certainly not match the level of support provided, if forced to finance the work itself, the Council made clear, warning that such a situation would be neither desirable nor efficient. The canton of Zurich remains an attractive business location in spite of the levy, the Council emphasized.

Zurich Cantonal Council also rejected a counter proposal to the initiative, proposing that the church contribution be voluntary, thereby giving corporations the option of whether or not to settle the tax. The Council stressed that this idea would simply be unworkable and pointed out that most firms would merely elect not to pay the fee.

Individuals in most areas of Switzerland are required to pay a direct tax on their income by way of contribution to the upkeep of the Protestant and Roman Catholic churches, if registered as church members. Legal entities are subject to the levy in 20 cantons in the Confederation, irrespective of their religious affiliation.

Of the CHF2.2bn (USD2.4bn) in total corporate taxes collected in Zurich in 2012, CHF106m flowed from church taxes.

The initiative is now due to be put to the vote on May 18.

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