Swiss to vote on scrapping 'popstar paradise' tax system

A tax system that has attracted wealthy foreigners like Phil Collins and Michael Schumacher to live in Switzerland will be put to a vote to see if the people want to scrap it.

An alliance of left-wing parties and trade unions said on Friday they had collected the 100,000 signatures needed to put their proposal, Enough with tax privileges for millionaires, to a referendum.

Switzerland has attracted more than 5,000 wealthy foreigners with tax deals based on the rental value of their property rather than their actual income or wealth, on the condition that they do not work in the country.

Along with Formula One driver Schumacher and popstar Phil Collins, Switzerland's wealthy expats include singer Tina Turner and the richest of all, Ingvar Kamprad, the founder of furniture store IKEA, who moved from Sweden in 1976.

Opposition to favourable treatment for tax exiles has grown in Switzerland, and the cantons of Zurich, Schaffhausen and Appenzell have already scrapped the policy after referendums.

But last month parliament rejected a proposal by the centre-left Social Democrats to scrap the tax breaks.

Instead it adopted a government plan to increase the basis on which taxes are levied to seven times the annual rental value of rich foreigners' homes from five times previously.

The Alternative Left party condemned that as a mere cosmetic tightening and joined the Social Democrats and trade unions to collect the necessary signatures to force a nationwide vote.

The flat-rate tax hurts equal rights and undermines attitudes to taxation, Alternative Left said in a statement.

The cabinet and parliament must now debate the initiative before it goes to a popular vote - discussions which could delay the referendum but not prevent it going ahead.

The special tax was first introduced in 1862 by the canton of Vaud along Lake Geneva in a bid to help the tourist industry by encouraging wealthy pensioners to move to the country. The government says 22,000 jobs are dependent on the scheme.

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