Switzerland to Temporarily Raise Taxes to Re-Arm Its Military

Switzerland plans to temporarily increase the value-added tax (VAT) to finance a major rearmament of its military.

According to a statement from the Swiss government, strengthening the armed forces has become necessary due to the worsening geopolitical situation.

Officials said the plan would require additional funding of around 31 billion Swiss francs (almost €34 billion).

The funds would be allocated both to the army and to civilian federal agencies responsible for national security.

To fund this project, Switzerland’s Federal Council is proposing a temporary, targeted increase in VAT of 0.8%, starting in 2028 and lasting for ten years.

“The additional revenue will be directed to a defense fund that carries debt obligations. Together with the tax relief package planned for 2027, this will form the basis for a balanced federal budget,” the government said.

On January 28, the Federal Council instructed the Department of Defence, Civil Protection and Sport to prepare a draft consultation paper on the issue by the end of March.

Currently, Switzerland spends only 0.7% of its GDP on defense, one of the lowest levels in Europe.

The government acknowledged that its previous plans for a gradual budget increase were insufficient. Years of cost-cutting have left the Swiss armed forces unprepared to effectively counter modern threats.

Priority areas for modernization include short- and medium-range air defense systems, cybersecurity, and the development of modern military technologies. For more on Switzerland’s defense industry, see the article: “Switzerland: A Big Defense Industry in a Small Country.”

Militarnyi previously reported that Switzerland plans to spend around €350 million to purchase various drone models. The Swiss Army will also acquire additional counter-drone systems.