Home›Forex›Central Banks›Commerzbank highlights Switzerland’s federalism and re…

Commerzbank highlights Switzerland’s federalism and referenda as growth drivers

Commerzbank says citizen votes on projects and the loans to fund them help limit government spending and debt, contrasting with Germany.

Reported · Written up by our desk · Central Banks

Commerzbank economist Dr. Jörg Krämer argues that Switzerland’s strong federalism and its extensive use of financial referenda support better economic outcomes. In the analysis, the Swiss system gives cantons and municipalities greater financial autonomy, including the ability to set income tax levels and other taxes.

The outlet says local jurisdictions compete to attract taxpayers by providing infrastructure at low cost, which it links to smaller government size and lower expenditure and indebtedness compared with Germany. Krämer adds that referenda are designed to restrain spending by putting citizens directly in the decision process on both tax levels and major projects.

Commerzbank also points to the structure of Swiss voting, where citizens vote not only on planned investment projects but also on the loans required to finance them. That setup, according to the analysis, is meant to make voters weigh both benefits and costs.

The firm further notes that referenda can cover tax rates even at the federal level within certain frameworks, making it harder for politicians to push for higher spending and higher taxes, the analysis concludes.

More like this

Sources