Public levies in Switzerland

The community in Switzerland levies public charges from its citizens in order to fulfill numerous public tasks. Taxes are a type of public levy without a direct return service from the state.

The Confederation, cantons, and municipalities act as communities in Switzerland. To fulfill constitutional or legal tasks, the community levies contributions in the form of services in kind and public levies from the persons under its jurisdiction. Services in kind must be personally provided by the individual, such as military and fire service. On the other hand, public levies are financial contributions of the individual to the community. These are divided into causal levies and taxes.

Causal Levies

Causal levies are raised by the community for specific counter-services to the individual. Each payment to the community is therefore tied to a specific, individual counter-service for the individual. The collection of causal levies is limited by the cost coverage and equivalence principle. The causal levies are further divided into:

• Substitute levy: A financial performance as a substitute for a service in kind (e.g., military or fire service exemption).
• Preference charge: Compensation for a special benefit that the citizen gets from a public facility (e.g., sewage connection, water and electricity lines).
• Fee: Charged for certain administrative acts (e.g., issuance of building permits) or for the use of a public facility (e.g., public indoor pool, hospital fees).

Taxes

In contrast to causal levies, taxes are owed unconditionally. The taxpayer does not receive a specific, individual counter-service from the community and must pay the tax even if he does not use the services financed by it. Taxes are divided into:

• Purpose tax: For financing specific levies (e.g., casino levy).
• General tax: To cover the financial needs of the community (e.g., income tax, value added tax, stamp duties).
• Regulatory tax: To steer the behavior of individuals (e.g., alcohol and tobacco taxes).

The mixed tax represents a combination of tax and causal levy. One part consists of a payment for state services or benefits, the other part consists of a levy owed without a counter-service. Examples include the dog tax and the vehicle tax (MÄUSLI-ALLENSPACH/OERTLI in Swiss Tax Law, 2013, p.52).

Source: Own representation based on MÄUSLI-ALLENSPACH/OERTLI in Swiss Tax Law, 2013, p.52.