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Switzerland is throwing billions of taxpayers’ money out the window: The Swiss Institute for Economic Policy (IWP) at the University of Lucerne made this drastic decision in its first subsidy report. In 2022, the federal government paid a subsidy of 48.5 billion francs. At CHF 38 billion, IWP’s subsidy traffic light shows a yellow or red light. From an economic standpoint, these payments are at least dubious and even unnecessary—because they “produce more harm than good,” writes IWP, which is considered economically liberal. The study’s authors see the potential to save billions of dollars from these “harmful federal subsidies.”
The trend is also of great concern to writers. “Subsidies have been increasing for years, but the federal government really needs to save money due to the growing budget deficit,” says study co-author Martin Mosler, 32. The federal government expects a funding gap of two to three billion a year over the next few years. Mosler: “No more debt is possible and a tax increase will likely meet with too much resistance from the electorate.” So the only option is to cut costs.
Yes to subsidies for farmers – but how much and for what?
According to the IWP, subsidy money is used particularly badly in the “agriculture and food” field, which receives 3.6 billion francs a year from the federal government. A large part of it flows in the form of direct payments and is intended, for example, to contribute to the security of supply of the country or to the cultivation of cultivated land. But the IWP study concludes that these targets are often missed. “Switzerland is only 50 percent self-sufficient and relies on open borders. Mosler says the payments do not provide more landscape protection, but are primarily industrial policy.
This policy is costing Swiss households dearly: food prices adjusted for purchasing power are almost 70 percent higher than the EU-wide average, and even meat is 130 percent higher. This is despite the fact that subsidies to Swiss farms contribute significantly more to income than the EU average. “There are certainly arguments that agriculture receives subsidies. But there is a huge savings potential here. Farmers benefit from successful lobbying here,” says Moser.
President of the Farmers Union
IWP research gives a nod to the President of the Swiss Farmers’ Association. “As far as agriculture is concerned, this report is characterized by blatant ignorance. He wrote something for the university’s ivory tower delete button,” says Martin Rufer (46). On the one hand, self-sufficiency is not an objective of agricultural policy or direct payments. “This shows that IWP’s subsidy report is based on completely false assumptions. Your assessment of payments to farmers is absurd. Rufer explains that direct payments do not harm Switzerland’s general welfare in any way.
The IWP subsidy traffic light also illuminates dark red in the “Economy” area. According to IWP, freeloaders typically use 430 million Swiss francs for energy-efficient building renovations. According to a 2019 survey, up to 50 percent of those receiving subsidies are renovating their homes and flats even without the tax money awarded.
Pensioners also pay the wages of the unemployed
Most of the subsidies flow into social welfare at CHF 23.5 billion. Mosler cites the example of unemployment insurance (ALV): “The federal government pays about 550 million a year there. But why should retirees who cannot claim this benefit pay here as well?” From the perspective of the IWP, the ALV should be fully funded by premium payments. “That would also be fair from a social policy standpoint,” says Mosler.
If subsidies increase in one area, the money will ultimately be missing elsewhere. Spending on “education and research” has fallen steadily in recent years. But elsewhere, reducing subsidies is politically difficult. Mosler: “Politicians often withdraw themselves because they quickly lose their popularity with influencers.”
should be deleted from here
The IWP concludes that many subsidies in agriculture harm the Swiss economy. For example, promoting dairy and livestock farming creates false incentives and does not make sense ecologically. In addition, too much money is poured into climate policy measures, and these measures ultimately have little impact because of certificate trading or that wealthy households take advantage of unnecessarily. Film financing also gets its fair share: “From a purely economic standpoint, why should movies be preferred over other leisure activities, from jogging to bowling?” The study authors ask themselves.
You should take a close look at this
Federal subsidies for social security, such as the AHV or IV, are constantly increasing. According to the IWP, higher premiums and thus expanding the polluter pays principle could help. IWP also raises big questions about the financing of transport: good infrastructure is a location advantage. However, the heavy double financing of road and rail has potential for savings. Some of the investment pots will support projects of dubious economic benefit.
Here every franc is worth its weight in gold
Subsidies can be of great benefit to the economy when invested in the right place: IWP, for example, often rates positively spending on education and research institutions such as universities or higher vocational education. But the army, police, penal system or border controls, which are security areas, also give the green light. The same applies to the environmental and spatial planning area. This includes, among other things, protection against natural disasters, financing of national parks and remediation of polluted areas.
should be deleted from here
The IWP concludes that many subsidies in agriculture harm the Swiss economy. For example, promoting dairy and livestock farming creates false incentives and does not make sense ecologically. In addition, too much money is poured into climate policy measures, and these measures ultimately have little impact because of certificate trading or that wealthy households take advantage of unnecessarily. Film financing also gets its fair share: “From a purely economic standpoint, why should movies be preferred over other leisure activities, from jogging to bowling?” The study authors ask themselves.
You should take a close look at this
Federal subsidies for social security, such as the AHV or IV, are constantly increasing. According to the IWP, higher premiums and thus expanding the polluter pays principle could help. IWP also raises big questions about the financing of transport: good infrastructure is a location advantage. However, the heavy double financing of road and rail has potential for savings. Some of the investment pots will support projects of dubious economic benefit.
Here every franc is worth its weight in gold
Subsidies can be of great benefit to the economy when invested in the right place: IWP, for example, often rates positively spending on education and research institutions such as universities or higher vocational education. But the army, police, penal system or border controls, which are security areas, also give the green light. The same applies to the environmental and spatial planning area. This includes, among other things, protection against natural disasters, financing of national parks and remediation of polluted areas.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
