Zurich voters abolish tax breaks for rich foreigners

Zurich voters abolish tax breaks for rich foreigners
February 08, 2009, 20:43 CET

(GENEVA) - Voters in the region of Zurich, the home of Swiss banking, sprang a surprise on Sunday by deciding to abolish tax breaks for rich foreigners living there, including showbusiness and sports stars.

Some 52.9 percent of voters -- more than 216,000 people -- backed an initiative launched by the left-wing Alternative List to abolish "tax privileges for foreign millionaires" in the canton.

It was the first time that the group had won a referendum in Zurich, the home of Switzerland's secretive and rather more conservative banking and finance establishment.

The result obliges cantonal authorities to change local tax laws.

The tax break has helped lure dozens of international sports, entertainment and business celebrities to Switzerland. In Zurich, 137 people benefitted from the deal in 2006, the Swiss news agency ATS reported.

In several cantons, wealthy foreigners have the opportunity to negotiate a confidential tax fee with local authorities based on their expenditure, instead of paying income tax, provided they do not work in Switzerland.

However, the practice has often triggered a storm of controversy in the home countries of some of the celebrities, amid accusations of tax dodging.

Unease has also grown in Switzerland recently, not least because some of their own stars -- such as tennis star Roger Federer -- could not enjoy the same deal.

Famous foreign residents in Zurich have included US singer Tina Turner and Russian oligarch Viktor Vekselberg.

Other celebrities residing in Switzerland last year included a brace of motor racing champions, such as Lewis Hamilton, Fernando Alonso, Kimi Raikonnen, Michael Schumacher and Sebastien Loeb, singers Shania Twain and James Blunt, as well as tycoons.

After arguing that the tax privilege was unfair, the Alternative List said it hoped the outcome would send a signal to the rest of Switzerland.