Switzerland - European Union: dispute on taxation
Switzerland is under pressure from the European Union because Swiss corporate taxation is less predatory than the European one - this fact is considered to constitute "harmful" tax competition. Swiss taxation is even said to "distort" cross-border competition. The European Commission's whiny decision can be found here, and here's the corresponding press release.
Yet, as so often: He who complains about competition being "unfair" is usually merely trying to hide his own incapability to prevail honestly on the given market, be it a tax market. Europe resembles more a People's Republic than a democratic market economy. The rich, the bright and the succesful have been quitting the sinking ship for some time now. The Lisbon goals seem further away than ever. No wonder the bureaucrats in Brussels do not like the ones who seem to be spoiling their little protectionist party.
The European Commission alleges that Swiss companies are relieved from operating (sic!) costs through direct taxation, which would give them an "unfair" advantage on the European market... Funny argument when you think of the paramount sums granted as subsidies within the European Union to all sorts of sectors: Out of the 120 billion Euros of the EU's 2006 budget at least 83 billions were spent on subsidies (you know the things called "Cohesion", "Welfare", "Natural ressources" etc.). But as these subsidies are spread all over the place and as they
Switzerland has two things to do now: Get back the initiative by considerably lowering or even abolishing corporate taxation in general - at least the direct federal profit tax (which exists besides cantonal taxation and amounts to a 8.5% rate). If the European Union does not like Swiss taxation, then why not make it even worse (i.e. more competitive)? The second thing to do is to increase the efforts in order to reach Free trade agreements with Japan and the United States. This would of course not be a substitute for the important and good economic ties which Switzerland has with Europe. But you shouldn't create a Cluster risk either.