Deteriorating threat situation: temporary VAT increase to strengthen security
Wegen der angespannten weltpolitischen Lage will der Bundesrat die Sicherheit und Verteidigung der Schweiz deutlich stärken. Dafür werden rund 31 Milliarden Franken benötigt – für die Armee und zivile Stellen mit Sicherheitsaufgaben. Zur Finanzierung soll die Mehrwertsteuer ab 2028 für zehn Jahre um 0,8 Prozentpunkte erhöht werden.
The global security situation and Switzerland's geopolitical environment have deteriorated noticeably in recent years. The world has become more volatile and insecure, and the international order based on international law is being put to the test.
Various countries in Europe are responding by strengthening their defense capabilities. Switzerland is also affected by these developments and is already confronted with hybrid conflict management, including cyber attacks and disinformation.
In addition, the army is not sufficiently equipped to deal with the most likely threats in particular - attacks from a distance and hybrid conflicts - due to the savings made in recent decades. In order to protect the population and the country and to avoid posing a security risk to Europe's defense architecture in the future, additional financial resources are therefore required; the planned growth in army spending to 1 percent of GDP by 2032 is not sufficient for this.
Prioritization of armaments procurement for the armed forces
In order to protect Switzerland, the armed forces have once again prioritized their armaments planning within the regular budget. This means that urgent gaps in the defense against probable threats can be closed more quickly.
For example, new systems for short-range ground-based air defense and defence against mini-drones or additional systems for medium-range ground-based air defense will be brought forward and included in the 2026 and 2027 Armed Forces Dispatches. Investments in IT, cyber protection and electromagnetic reconnaissance and defense also have priority.
With this prioritization, it is possible to improve protection against the most likely threats up to the 2030s within the framework of the available financial resources. However, this protection is not yet comprehensive.
Tense arms market: price increases and high advance payments
The challenges lie in the fact that the financial resources contained in the current budget and financial plan no longer correspond to the realities of the armaments market. Among other things, armaments are constantly becoming more expensive, by up to 40 percent (inflation, increased demand). In addition, a down payment of at least one third of the purchase price is usually required. Without adapting the financial resources to the new price reality, the capacity build-up would be reduced. This has a negative impact on the protection of the population and the country against threats.
Additional revenue for the armed forces and civilian federal offices with security tasks
The additional requirement is not just for armaments investments. Comprehensive protection also requires the civilian federal offices with security-related tasks to build up and expand their capabilities. After all, military protection is only partially effective without intelligence services, civilian alerting, internal security (police and border protection), security communication or resilient crisis management capacities.
The Federal Council notes that this additional financial requirement will amount to around CHF 31 billion from 2028. This additional requirement must be financed with additional revenue, as there is no financial leeway in the federal budget and the debt brake must be adhered to. The Federal Council has come to the conclusion that an increase in VAT is preferable to other options in view of the impact on the economy and society.
Temporary increase in VAT by 0.8 percentage points for ten years
An amendment to the Federal Constitution is required to increase VAT. The Federal Council has therefore instructed the DDPS to submit a consultation draft by the end of March 2026. VAT is to be increased by 0.8 percentage points for a limited period of ten years from 2028. This revenue will be earmarked for the strengthening of Switzerland's security and defence and prioritized for the army's armaments expenditure.
The plan is for the dispatch to be submitted to parliament in the fall. The referendum could take place in summer 2027 and the VAT increase could come into force on January 1, 2028.
Source: VBS
