Switzerland: Voters reject environmental tax measures, including revised CO2 tax

Ballot initiative would have revised carbon dioxide law (CO2 law) that proposed new environmental tax measures.

Ballot initiative would have revised carbon dioxide law (CO2 law)

Swiss voters rejected a 13 June 2021 ballot initiative that would have revised the carbon dioxide law (CO2 law) that proposed new environmental tax measures.

For background on the tax measures included in the ballot initiative, read TaxNewsFlash.

What’s next?

With the voters’ rejection of the proposed revision of the CO2 law, the Swiss political parties will need to work with the representatives of affected economic sectors to identify elements that could remain viable and possibly to find a compromise on a new text for the CO2 law. Different approaches may need to be considered (e.g., passing legislation on a sector-by-sector basis, define new instruments / mix of incentive policies and tax measures, etc.).

As an immediate next step, the Swiss government will have to determine whether those measures provided in the current CO2 law that are scheduled to expire at the end of 2021 can be extended beyond this year to allow for continuity of the Swiss CO2 emissions reduction policy. Those measures include the possibility for specific business sectors to claim an exemption from the CO2 levy on thermal fossil fuels to the extent that they commit to improve the efficiency of their installations and reduce their carbon emissions. For the industrial sector, businesses using thermal fossil fuels could be significantly affected as they may no longer be able to claim the tax exemption. Therefore, unless this measure is extended beyond 2021, the CO2 levy could become a bottom-line cost directly affecting businesses. 

Other measures set to expire at the end of the year include:

  • The obligation for importers and producers of fossil fuels in Switzerland to compensate their CO2 emissions
  • The amount of the CO2 levy on thermal fossil fuels (current annual threshold set at 120 Swiss francs)
  • The determination of concrete annual targets for the reduction of CO2 emissions in Switzerland 

Read a June 2021 report prepared by the KPMG member firm in Switzerland


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