For those unfamiliar with this "rental tax": If you own a house in Switzerland, the tax office assumes that you are your own landlord and rent your house to yourself. It estimates the fictitious rent you charge yourself, and you have to pay income tax on it. The Swiss German name for this estimated rent is "Eigenmietwert" ("self-rental value") and this is what will now be abolished.
What makes this strange tax even more absurd: as you are your own landlord, your property interest rate becomes a business expense of your hypothetical rental company. So you can deduct your property interest from this income tax on the fictitious rent you pay yourself.
In effect, it is unattractive to fully repay your mortgage (you just leave enough debt to avoid the income tax), and Switzerland has the highest household debt in the world. By a large margin [0].
It is not that absurd, we have the same in The Netherlands (eigenwoningforfait). And yes, we also have the property interest deduction, we literally call it mortgage interest deduction (hypotheekrenteaftrek, HRA).
They reason this is done is because it allows tax systems to tax main residencies differently from regular real estate tax measures, which is usually in the wealth section of tax policy.
It stems from the 1890s in The Netherlands, I assume it'll be around the same era for Switzerland and Germany.
And for other readers, yes it is as terrible a tax policy as it sounds. It is highly regressive, favoring home owners over renters, and the more expensive your house the bigger the deduction. In The Netherlands the current election cycle has it as one of the subpoints of our housing crisis, and it seems the battle won't even be about if it should be abolished, but rather if the timeline should be 30, 15, or 8 years.
Unlike the proposed UK digital ID (which is not a "card"), this one is optional. Nobody is being forced to buy a smartphone and accept Apple or Google's terms of service.
Define optional? There will be new checks introduced online where you can only enter if you have an E-ID.
Companies do have to accept a physical card as well, but only if you appear physically at the companies doors. Otherwise, that statement was kind of deceptive in my opinion because there will be a lot of pressure to get one. They also decided to make it free, which shows they probably want to achieve a high adoption.
But the Swiss already have a unique digital identifier for everyone living and working in Switzerland (your AVS number I think?) so it's really not optional, and is the primary purpose of the new UK id. The actual application itself is much of a muchness.
Also, the UK gov has already said there will be solutions for old people/time travellers/the Amish etc without phones. Nobody is going to force anybody to buy a phone.
A sad development. At least in the US, the fact that rent is taxable income to the landlord but imputed rent is untaxed is a regressive tax break for property owners (and was apparently a mistake of the original Form 1040; see Lawrence Zelenak, “The Early Income Tax and the Imputed Rental Income of Homeowners” https://doi.org/10.1017/9781108377157.008). I wonder what convinced majority-renter Swiss voters to enact such a tax break?
Wages are taxable income to workers but imputed wages are untaxed. That’s a regressive tax break for people who cook their own food and care for their own children.
Switzerland is transitioning to online voting, and having a digital ID for authentication is helpful for that. I hope it is used as part of the voting process.
My understanding is that the current approach for e-voting in Switzerland works with voters being sent a PIN in the mail [1]. Then the voter uses the PIN to log into the system and vote. Unfortunately that means that insecurely discarded letters from non-voters could be used to cast votes on behalf of these voters.
Some jurisdictions try to use a second factor to prevent these attacks. In Ontario, for example, many municipalities use a combination of the voter's PIN in the mail + the voter's date of birth. But a date of birth isn't really secret. Lots of people know your date of birth (especially insiders at organizations that collect this data), and it may appear in data breaches or even publicly on social media. If you're curious about this, I recently co-authored a paper which is all about security problems relating to online voting credentials in Ontario -- It's relevant to the Swiss case as well: https://link.springer.com/chapter/10.1007/978-3-032-05036-6_...
Long story short, using a digital ID to authenticate to the system (like Estonia does) goes a long way to mitigate this authentication problem. However, there are still plenty of other potential risks with online voting that are unrelated to authentication (how do you prevent ballot stuffing, clientside-vote-altering malware, falsified counts, etc). And there may be privacy risks with digital ID depending on the practical implementation.
The idea is, if you live in your own house, you’re no better off than if you lived in another property and rented out your property, and paid the tax on the rent you get.
It’s supposed to reduce friction / bias in the market (though you could also obviously argue the reverse).
There’s nothing inherently wrong with e-ID, it can be mighty useful, especially when implemented thoughtfully. The real problem is when it’s imposed despite widespread societal opposition and refusal (which obviously is not the issue here, but is in other countries).
I agree that it can be useful, but I fear that in the future, we will have many more online platforms that require an ID than we currently do.
In the past, things like age verification required users to upload a scan or photo, and someone had to verify it. Because that was too much work for the platform operators, they didn't do it (or only with the banner "Are you over 18?").
With the e-ID instead, this will be much simpler to implement. And I expect it to become much more widespread in the future.
The inherently wrong part about it is that it is extremely easy to revoke at the push of a button, vs a physical card that must be physically confiscated.
Not much. They are moving from a regime where owner-occupier mortgage interest is deductible but you have to pay income tax on the imputed rental value of your owner-occupied home, to one where you don't pay the tax but also can't take the deduction.
For most Swiss people, who rent, it doesn't directly affect them. And even for most owner-occupiers, they never pay off their mortgages, and so the two effects currently cancel out. It's mostly a handout to rich people who can pay off a house (or inherited one).
Destroys it. The change will immediately raise property prices 5-10%. The only beneficiaries are those who own property today. It becomes harder to buy property, while people who own property free and clear get a huge tax benefit and only lose a tax deduction they weren't using. Essentially, it is generational warfare in the style of Prop. 13 in California.
The price of houses has just gone up because they have removed a real estate tax. Simple, and short sighted. The taxes need to be raised from somewhere so now let's see what convoluted and complex schemes they come up with to do that.
lqet|5 months ago
What makes this strange tax even more absurd: as you are your own landlord, your property interest rate becomes a business expense of your hypothetical rental company. So you can deduct your property interest from this income tax on the fictitious rent you pay yourself.
In effect, it is unattractive to fully repay your mortgage (you just leave enough debt to avoid the income tax), and Switzerland has the highest household debt in the world. By a large margin [0].
[0] https://en.wikipedia.org/wiki/List_of_countries_by_household...
jorvi|5 months ago
It is not that absurd, we have the same in The Netherlands (eigenwoningforfait). And yes, we also have the property interest deduction, we literally call it mortgage interest deduction (hypotheekrenteaftrek, HRA).
They reason this is done is because it allows tax systems to tax main residencies differently from regular real estate tax measures, which is usually in the wealth section of tax policy.
It stems from the 1890s in The Netherlands, I assume it'll be around the same era for Switzerland and Germany.
And for other readers, yes it is as terrible a tax policy as it sounds. It is highly regressive, favoring home owners over renters, and the more expensive your house the bigger the deduction. In The Netherlands the current election cycle has it as one of the subpoints of our housing crisis, and it seems the battle won't even be about if it should be abolished, but rather if the timeline should be 30, 15, or 8 years.
OptionOfT|5 months ago
But... this is based on values of either in the 90s, or 70s.
I remember because the hypothetical income (on a yearly basis) for our 2016 new build was €1,200. Remember, income, not profit.
You couldn't rent a place within 5 miles that was below €1,000 per month.
Anon1096|5 months ago
In English this is called imputed rent, it's used in US for CPI calculations.
tempodox|5 months ago
vinni2|5 months ago
ivell|5 months ago
https://github.com/swiyu-admin-ch
pheggs|5 months ago
herbst|5 months ago
mrob|5 months ago
pheggs|5 months ago
Companies do have to accept a physical card as well, but only if you appear physically at the companies doors. Otherwise, that statement was kind of deceptive in my opinion because there will be a lot of pressure to get one. They also decided to make it free, which shows they probably want to achieve a high adoption.
crimsoneer|5 months ago
Also, the UK gov has already said there will be solutions for old people/time travellers/the Amish etc without phones. Nobody is going to force anybody to buy a phone.
yonran|5 months ago
kgwgk|5 months ago
cool_cherry|5 months ago
My understanding is that the current approach for e-voting in Switzerland works with voters being sent a PIN in the mail [1]. Then the voter uses the PIN to log into the system and vote. Unfortunately that means that insecurely discarded letters from non-voters could be used to cast votes on behalf of these voters.
Some jurisdictions try to use a second factor to prevent these attacks. In Ontario, for example, many municipalities use a combination of the voter's PIN in the mail + the voter's date of birth. But a date of birth isn't really secret. Lots of people know your date of birth (especially insiders at organizations that collect this data), and it may appear in data breaches or even publicly on social media. If you're curious about this, I recently co-authored a paper which is all about security problems relating to online voting credentials in Ontario -- It's relevant to the Swiss case as well: https://link.springer.com/chapter/10.1007/978-3-032-05036-6_...
Long story short, using a digital ID to authenticate to the system (like Estonia does) goes a long way to mitigate this authentication problem. However, there are still plenty of other potential risks with online voting that are unrelated to authentication (how do you prevent ballot stuffing, clientside-vote-altering malware, falsified counts, etc). And there may be privacy risks with digital ID depending on the practical implementation.
[1] https://digital-solutions.post.ch/en/e-governmenthttps/digit...
elric|5 months ago
patrickmay|5 months ago
savingsPossible|5 months ago
At least according to phind
https://www.phind.com/search/cmg40zr9i00002a6lqddmuyxt
I suppose that would count as a progressive tax (as opposed to regressive, like VAT)
tomp|5 months ago
The point is fairness, not progressiveness.
The idea is, if you live in your own house, you’re no better off than if you lived in another property and rented out your property, and paid the tax on the rent you get.
It’s supposed to reduce friction / bias in the market (though you could also obviously argue the reverse).
poszlem|5 months ago
Lukas_Skywalker|5 months ago
In the past, things like age verification required users to upload a scan or photo, and someone had to verify it. Because that was too much work for the platform operators, they didn't do it (or only with the banner "Are you over 18?").
With the e-ID instead, this will be much simpler to implement. And I expect it to become much more widespread in the future.
miohtama|5 months ago
https://news.ycombinator.com/item?id=41608810
tehjoker|5 months ago
Arwill|5 months ago
mulmen|5 months ago
brainwad|5 months ago
For most Swiss people, who rent, it doesn't directly affect them. And even for most owner-occupiers, they never pay off their mortgages, and so the two effects currently cancel out. It's mostly a handout to rich people who can pay off a house (or inherited one).
jeffbee|5 months ago
m101|5 months ago
benbojangles|5 months ago