The Government
The
Federal Council is Switzerland’s government. It consists of seven members, who take decisions and defend their decisions in a
collegial manner. The presidency rotates every year. The Federal Council is assisted
in its tasks by the Federal Administration. The Administration is made up of seven
departments and the Federal Chancellery. The Confederation’s expenditure may
not exceed its receipts over the longer term: this is ensured by the debt brake
mechanism.
Federal finances: checked and approved
The Federal Constitution sets out what taxes the Confederation is
allowed to raise. Maximum tax rates are defined for the main sources of receipts,
namely direct federal tax and value added tax. These may only be modified if a
majority of the People and the cantons agree. Parliament has
sovereignty over federal finances: it decides the budget and approves the state
financial statement of the previous year.
Debt
brake mechanism
The Confederation is required
to balance its expenditure and receipts over the longer term. It is required to
run a surplus when the economy is thriving and may spend more than it collects
in receipts when the economy is weak.[2]
The debt brake does allow for an exception to be
made in extraordinary crisis situations such as serious recessions and natural
disasters; the government may then undertake additional expenditure.
COVID-19
The pandemic that has been
raging around the world since early 2020 has had a significant impact on the
state of federal finances. To support the economy and the people, the Federal
Council and Parliament have taken a series of measures costing several billion
francs. At the same time, the Confederation is expecting lower tax revenues
than usual. Thanks to the low level of government debt, Switzerland and the Confederation in
particular are in a solid position.
Federal receipts and expenditure (2019)
Receipts of 74.5 billion
Direct federal tax and VAT are
the Confederation’s main sources of receipts. Direct federal tax is raised on
the income of private individuals (progressive, max. 11.5%), and on business
profits (8.5%). VAT is 7.7% on most goods and services.
Expenditure of 71.4 billion
Almost a third of federal expenditure goes towards social welfare. Half
of that goes towards old age pension provision (OASI), and a sixth to invalidity
insurance (II). Other major areas of expenditure are supplementary benefits, health
insurance premium reductions, and migration.
Political party composition of the Federal Council since 1948
1848
The Federal
Council was composed of seven members of the Free Democratic Party (today FDP.The
Liberals). The party governed alone for 43 years.
1891
The first member of the
Catholic Conservatives (today CVP) joined the government; the second joined in 1919.
1929
Parliament elected a member of the Farmers’, Trades’
and Citizens’ Party (today SVP) to the Federal Council.
1943
The first Social
Democrat (SP) entered the government; the second followed in 1951.
1959
The four strongest parties agreed to form a
government by applying the ‘magic formula’:
2 FDP, 2 CVP, 2 SP,
1 SVP. The formula remained unchanged for 44 years.
2003
At the Federal
Council elections, the SVP won a seat at the expense of the CVP.
2008
The two
representatives of the SVP joined the newly founded Conservative Democratic
Party (BDP).
2009
A member of the SVP was elected in place of a
retiring BDP representative.
2015
The BDP
representative stepped down. Parliament elected an SVP representative in her
place.
Since then
The Federal Council has again been composed of members from four different
political parties – according to the 2:2:2:1 formula.
