A Tax Paradise Shakes Up the EU

Sachseln is in the Kanton of Obwalden. Obwalden is a half kanton along with Niewalden, its other half. As with all kantons, they are fiercely protective of their independence in the confederation. Matters of education, taxes, etc. are the right of each kanton. The federal government is secondary to them in many ways.

Last year, Obwalden dropped their corporate income taxes to about 13%. This is well below half of what some kantons levy, and much below countries such as France, Germany and others who charge corporations up to 50% of their income in tax. Kanton Zug has for years, been one of the lowest tax spots in CH, but now Obwalden has become the lowest. No surprise that a definite influx of new corporations have arrived or plan to arrive soon.

The liberal element (mostly in western CH) isn't happy with this tax arrangement because it wants more taxes collected and spent on social programs. The conservative elements (mostly German speaking sections) think lower taxes are OK. The European Union is not happy about this in the least.

Switzerland is not a member of the EU and likely won't be as such for many years, if ever. The Swiss have agreed on a number of "bilateral accords", which are treaties that govern border controls, goods trade, etc. There is no accord on taxation. Therein lies a problem. The EU has gone ballistic when it sees companies leaving the EU to come to Obwalden to pay less tax. This flap has gone on for some months with the Swiss telling the EU to butt out of the kanton's business, and the EU saying that the treaty on trade governs taxes too. It is generally agreed that the EU's position is quite weak on that point.

Switzerland's economy demands trade with the EU to remain healthy, so a trade embargo by the EU, although unlikely, would be a disaster. By their common heritages, Germany and Austria are not sure to agree for sanctions like this anyway. Some countries, such as Spain, France, and Germany have such powerful unions and agricultural lobbies that they can bring down a government. The politicians are afraid in those places right now. Since the national strike back in about 1918, the Swiss unions have,by general agreement, used negotiation and mediation to solve labor-management problems.

The EU member with the lowest tax rates on corporations is Ireland. It also is almost exactly that of Obwalden, so I guess a case could be made that what is OK for Ireland is OK for Obwalden. The main sticking point is that the Swiss, liberal and conservative, are not about to let the EU dictate to them from Brussels. It really got sticky a day or so ago when the Swiss President, a left leaning woman, told the EU in a speech that they were really not acting nicely and to clean up their act.

Meanwhile, the individual tax rates here have fallen also but not as much as the corporate rates. That may mean that I will pay less Swiss tax, therefore get less tax credit from the USA and wind up paying more to the IRS. They seem to get you coming and going.

Swiss Tourism, Ladies' Panties, and Fred's Meds

Well, this has been an exciting week new-wise in CH. First and foremost, Switzerland has come out as the number one tourist competition country in the world (at least of the 124 countries surveyed by the World Economic Forum). This is in part due to considerations of security, transportation networks, tourism infrastructure, and overall industry health. This designation is not like winning a beauty contest, but it indicates those countries in which tourism development is most favorable.

Austria and Germany are the second and third in the list. Then come Iceland and the USA, as the top five. CH counts only 7.2 million tourist arrivals per year compared to 49.4 for the USA and 76.0 for France. One of the biggest complaints about CH from the survey was the high prices. France's position is in at least some part due to perceived attitudes against foreigners. Spain is a security worry, and in Italy, there is thought to be a lack of governmental support for tourism.

Now for some other good news. No, I didn't save a lot of money on my car insurance, but I did find out in the USA this trip, that my investment in Medicare's part D saves me some $$ on the few medications that I buy there. I just knew that someday, the government would take care of me.

Last, but certainly not the least, comes the news about the ladies' underwear, which I know that everyone has been anticipating. There is a bar club near the Pilatusplatz (near the center of "new town" in Luzern), that on Sundays between 8 PM and 4 AM will trade a bottle of Italian Champagne worth almost 100 CHF for a lady's panties. It seems that about 15-25 women trade their drawers for some bubbly each Sunday. The name of the bar is "Opera", although you don't have to sing. The head man of the Sociology Department at Luzern University thinks this is an embarrassing business idea, so I doubt you will run into him there.