The case

​According to today’s NZZ, the new financial compensation introduced 15 years ago has changed Switzerland considerably. While a few cantons have been able to increase their financial strength, others have slid down in the ranking. What really stands out is that especially the cantons from central Switzerland have been developing positively, most notably the rise of Obwalden, which after 2008 used to be one of the largest cantons on the losing side.

Thanks to a tax offensive that has been attracting private individuals and companies to Lake Sarnen, Obwalden has become a donor canton. With this spectacular change, Obwalden has caught up with the rest of Central Switzerland. Zug and Nidwalden have long been among the cantons that keep Switzerland running with their contributions. It seems that tax competition in the close geographical vicinity stimulates business.

Source: Neue Zürcher Zeitung 18 July 2023, front page and p. 9 (abridged)

The commentary

Apart from Central Switzerland and Zurich, all other large regions are among the beneficiaries of the new fiscal compensation scheme. Whereas eastern Switzerland is slowly making progress and catching up at a low level, one region remains a problem: Espace Mittelland, which includes Berne, Fribourg, Solothurn, Neuchâtel and Jura. These cantons were awarded the most money from the financial compensation scheme in 2008. Today, the payments to these cantons are even higher. Collectively, the differences between the cantons have been increasing over the past 15 years. In spring 2024, the Federal Council will present the next effectiveness report on the overall system. Anything but a heated debate would come as a surprise.

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