Switzerland Plans Significant Increase in Defence Spending Funded by Sales Tax

Switzerland's Defence Spending Strategy

ZURICH, Jan 28 (Reuters) - Switzerland plans to inject an additional 31 billion Swiss francs ($40.38 billion) into defence and security spending starting from 2028 and will increase sales tax for a decade to help fund it, the government said on Wednesday.

Geopolitical Context

Citing a deterioration in the geopolitical situation, the governing Federal Council said defence must be strengthened in Switzerland, where spending on the military is not currently scheduled to reach 1% of gross domestic product until 2032.

Financial Implications

Under the new plan, sales tax is to be increased by 0.8 percentage points for 10 years starting in 2028, it said.

Parliamentary Approval Process

"The world has become more volatile and insecure, and the international order based on international law is under strain," the government said, noting various European countries have responded by strengthening their defence capabilities.

Swiss officials and lawmakers warn that conflicts including Russia's invasion of Ukraine, U.S. rivalry with China and tensions in the Middle East pose a risk to the country, through threats such as spying, cyberattacks and even terror attacks.

The government said current financial planning no longer reflected increases in the cost of arms, which have been driven by inflation and greater demand.

The government's plan would need to pass parliament and faces a referendum that could take place next year, it said.

According to the plan, the spending priorities should also encompass investment in IT, cybersecurity and electromagnetic reconnaissance, as well as police and border protection.

($1 = 0.7678 Swiss francs)

(Reporting by Dave Graham, Editing by Miranda Murray)