Swiss Income Tax Brackets To Be Left Unchanged
Switzerland will not adjust its federal income tax brackets going into 2013, leaving them at those determined back in September 2011, according to an announcement from the Swiss federal authorities.
By law, the Federal Department of Finances is required to adjust federal income tax thresholds and deduction allowances to compensate for inflation, with a view to avoiding the effects of 'fiscal drift' (Progression à froid/Kaltes Progression), unless there is deflation.
The figures set by the Swiss CPI Index (1982 = 100) each June 30th are used for the purposes of calculating personal income tax brackets. However, this year, national CPI Index has declined by 1.7bps to 160.2.
The law provides that compensation for fiscal drift - a situation whereby rising wages push more people into paying tax at higher rates, thus acting as an automatic tax increase - are calculated every summer, but that in cases of deflation, no adjustments can be made until the CPI index surpasses again its level prior to the deflation. In other words, if inflation comes back in 2013, the next adjustment for fiscal drift will have to take into account the June 2011 inflation levels, and not the June 2012 levels.
Story taken from www.tax-news.com