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Viewing cable 09BERN64, SWISS VOTE TO EXTEND FREE MOVEMENT OF PERSONS WITH

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Reference ID Created Released Classification Origin
09BERN64 2009-02-10 09:01 2011-08-25 00:00 UNCLASSIFIED Embassy Bern
R 100901Z FEB 09
FM AMEMBASSY BERN
TO SECSTATE WASHDC 5649
UNCLAS BERN 000064 
 
 
E.O. 12958: N/A 
TAGS: EFIN PGOV SZ
SUBJECT: SWISS VOTE TO EXTEND FREE MOVEMENT OF PERSONS WITH 
EU, CURTAIL TAX BREAKS FOR WEALTHY FOREIGNERS, AND EXPAND 
WEF MEETING VENUE IN DAVOS 
 
----------------------------------------- 
EU-SWITZERLAND "FREE MOVEMENT OF PERSONS" 
----------------------------------------- 
 
1.  In a nationwide referendum held February 8, nearly 60 
percent of the Swiss electorate voted in favor of 
maintaining an existing agreement with 25 EU states 
allowing for the free movement of persons, while also 
extending that agreement to include the newest EU member 
states, Bulgaria and Romania.  While the referendum had 
been expected to pass, the margin in favor was larger than 
anticipated for what has been a divisive political issue 
within Switzerland.  In the run-up to the referendum, the 
rightist Swiss People's Party (SVP) conducted a major 
public campaign calling for the Swiss electorate to vote 
"no", arguing that the question of broadening the agreement 
to include Bulgaria and Romania should not have been linked 
to the question of maintaining the existing agreement.  In 
its campaign, the SVP alleged that extending the agreement 
would lead to lower Swiss salaries, increased unemployment, 
and higher crime. 
 
2.  Confronted with such high-profile opposition to the 
agreement, the Swiss government drew on the support of key 
industries and major political parties (except the SVP) in 
its advocacy of the extension, describing the agreement 
with the EU Q- Switzerland's most important trading partner 
-- as crucial for the Swiss economy and for the export 
sectors in particular.  Majorities in 22 out of 26 cantons 
supported the referendum.  The strongest opposition came 
from Ticino, where voters seemed to be particularly 
concerned with the canton's economic and social inter- 
dependence with Milan. 
 
---------------------------------- 
ZURICH TO ELIMINATE "LUMP SUM" TAX 
---------------------------------- 
 
3.  In a cantonal referendum held also on February 8, 
nearly 53 percent of Zurich's voters unexpectedly called 
for the elimination of the special "lump sum" taxation 
reserved for wealthy foreigners living in Zurich but not 
employed in Switzerland.  In Zurich and some other Swiss 
cantons, wealthy foreigners have the opportunity to 
negotiate a confidential tax fee with local authorities 
based on their expenditures, instead of paying income tax, 
provided that they do not work in Switzerland.  The center- 
left political parties' in Zurich proposed the elimination 
of this tax option that benefits some wealthy foreigners. 
The center-right political parties opposed the proposal, 
arguing that Zurich would lose revenue to other cantons if 
it eliminates the lump sum tax.  The referendum result 
obliges cantonal authorities to change Zurich's tax laws. 
According to press reporting, the parties in favor of the 
change hope that the outcome will now send a signal to the 
rest of Switzerland.  Approximately 140 foreign residents 
reportedly utilize the lump sum tax option in Zurich. 
 
--------------------------------------------- -- 
DAVOS VOTERS APPROVE KONGRESS CENTER EXPANISION 
--------------------------------------------- -- 
 
4.  The citizens of the mountain resort community of Davos 
confirmed the importance of the World Economic Forum (WEF) 
Annual Meeting for their local economy by voting in favor 
of a USD 33 million extension of the convention facilities 
("Kongress Center") used each January for the WEF gathering 
(Davos itself reportedly is to cover USD 24 million of the 
cost).  Spokesmen for the project estimate the construction 
work will start in Spring 2009 and should be finished by 
the end of 2010.  Convention tourism has become a key 
source of revenue for Davos, creating approximately 600 
jobs and earning the region USD 53 million in 2007.  The 
WEF Annual Meeting, being DavosQ most high-profile 
gathering, accounts for 27,000 overnight stays during the 
course of each session.  The WEF reportedly has committed 
to holding its annual meeting in Davos for at least ten 
years after the extension of the convention center. 
 
CARTER