At its meeting on August 21, the Federal Council started a consultation on an amendment to the current law on tobacco taxation in Switzerland.
The proposed revision does not involve an immediate tax increase, but would grant the Federal Government the power to increase the tax burden on cigarettes and fine-cut tobacco, thereby giving it room for maneuver in policy, if so desired.
It was explained that, in recent years, the Federal Council has aimed to bring the tax burden on tobacco in Switzerland to the minimum level within the European Union, while also providing more revenue to the Government. Revenue from tobacco taxes are allocated, by law, to co-finance federal contributions to old age, survivors' and disability insurance.
The ability of the Federal Council to increase the tax burden on cigarettes was exhausted by the last increase on April 1 this year (rising by 10 cents per pack). Considering the current price of the category most sold is CHF8.20 (USD8.94), the proposed amendment would allow a gradual tax increase of up to CHF2.80 per pack of cigarettes.
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.