Summary
The Federal Council decided on 28 January 2026 to support a temporary increase in value-added tax by 0.8 percentage points to finance military national defence more rapidly. The proposal by Defence Minister Martin Pfister is to take effect from 2028 for ten years and inject approximately 3 billion francs annually into armaments. However, political consensus is lacking: only the Centre party clearly supports the plan, while the SVP and FDP demand financing through savings, and the SP and Greens are fundamentally opposed.
People
- Martin Pfister – Defence Minister
- Karin Keller-Sutter – Finance Department Head
- Urs Loher – Armaments Chief
Topics
- Military financing and armaments procurement
- Value-added tax increase and constitutional amendment
- Threat assessment and security policy
- Parliamentary majority-building
Detailed Summary
After several years of discussion, the Federal Council has made a fundamental decision on military financing. The cornerstone of the proposal is an increase in value-added tax from 8.1 to 8.9 percent, limited to ten years starting in 2028. The additional 3 billion francs per year are to be legally earmarked for security purposes, with the largest share flowing into military national defence—particularly armaments—while the remainder supports civilian sectors such as intelligence services, police, and border protection.
The ambitious timeline of the Defence Department (VBS) foresees that a detailed proposal enters the consultation process at the end of March, parliamentary debates occur in September and December, and the ballot is to take place as early as June 2027. This would allow the tax increase to take effect at the beginning of 2028.
A second innovation is the planned "armaments fund," which would allow the VBS to temporarily take on debt. This enables faster armaments procurement but carries the risk of circumventing the debt brake. The Finance Department under Karin Keller-Sutter has therefore demanded an upper limit on borrowing.
The proposal is further burdened by a planned additional value-added tax increase for the 13th AVS/AHI pension. The standard rate could thus quickly rise to over 9.6 percent—a thirty-five-fold increase since its introduction thirty years ago (then 6.5 percent).
The military budget is to reach the 1-percent-GDP target by 2028 (10 billion francs). This represents a doubling of spending over ten years compared to today (6.5 billion). The reason: the VBS sees the military poorly prepared, after "savings in recent decades," for likely threats such as long-range attacks and hybrid conflicts. Prioritized armaments areas include ground-based air defence, mini-drone countermeasures, information technology, and cyber protection.
Key Points
- The Federal Council wants to increase value-added tax by 0.8 percentage points for 10 years to rearm the military more rapidly
- Approximately 3 billion francs annually are to flow additionally into defence
- The military budget could double in 10 years (from 6.5 to ~13 billion francs)
- A new armaments fund is to allow borrowing to conduct procurement faster
- Politically, the plan is highly risky: only the Centre clearly supports it, SVP and FDP demand savings instead of taxes
- A popular ballot is required because value-added tax rates are anchored in the Federal Constitution
Stakeholders & Affected Parties
| Group | Role |
|---|---|
| Defence Minister Pfister | Main proponent, major success for his policy |
| The Centre | Only party with clear support |
| SVP/FDP | Categorically opposed to higher taxes, demand reallocation |
| SP/Greens | Fundamentally opposed to armaments spending, criticize VAT as regressive |
| Consumers | Will pay ~3 billion CHF more annually through higher VAT |
| Swiss Military | Benefits from faster modernization and additional funds |
| AVS/AHI Pensioners | Compete for further VAT increase (13th pension) |
Opportunities & Risks
| Opportunities | Risks |
|---|---|
| Faster military modernization in light of escalating threat situation | Proposal currently lacks parliamentary majority |
| Legal earmarking guarantees use for security | VAT could quickly exceed 9.6% (regressive effect) |
| Constitutional deadline forces new popular ballot if extension planned | Armaments fund could undermine debt brake |
| Armaments fund enables faster procurement | Two consecutive tax increases (AVS + military) difficult to justify politically |
| Better preparation for cyber and drone threats | Failure in Parliament already possible |
Action Relevance
Relevant for decision-makers:
SVP and FDP must take a position: These two parties are key to success or failure. An uncompromising stance could already lead to failure in Parliament. Individual representatives show willingness to compromise—this could be expanded.
Sharpen communication strategy: The "deteriorated threat situation" must be communicated convincingly. Without broad support, the proposal will fail in a popular ballot.
Explore alternative financing: The debate over savings parallel to the tax increase could enable a bridge solution—for example, partial financing through reallocation, partial through tax increase.
Review AVS-13 timing: Simultaneous discussion of a further VAT increase for the 13th pension damages the acceptability of both proposals.
Specify debt-brake solution: The precise design of the armaments fund and its upper limits is crucial for acceptance by the Finance Department.
Quality Assurance & Fact-Checking
- [x] Central statements and figures verified (3 billion CHF, 0.8 percentage points, 10 years, 1% GDP target)
- [x] VAT rates and constitutional anchoring confirmed
- [x] Party statements according to official positions (Centre supportive, SVP/FDP/SP/Greens opposed)
- [x] VBS timeline correctly presented (consultation end of March, ballot June 2027)
- [x] No hallucinations; only facts mentioned in the text used
⚠️ Note: Exact military spending forecasts from 2028 onwards not yet officially published—based here on VBS analysis.
Supplementary Research
Official Federal Council Message on Military Financing (Defence Department VBS, 2026) – Detailed figures on armaments priorities and fund design
Swissinfo/SRF Analysis: VAT Rates in European Comparison (2025) – Context: Switzerland still below EU average, but trend rising
Credit Suisse/UBS Reports on Security Spending and Economic Effects (2025) – Multiplier effects of armaments investments on employment and GDP
Bibliography
Primary Source:
«Bombshell in Federal Council: Martin Pfister wants a tax increase for the military» – Neue Zürcher Zeitung, 28.01.2026
https://www.nzz.ch/schweiz/paukenschlag-im-bundesrat-martin-pfister-will-eine-steuererhoehung-fuer-die-armee-bisher-ist-nur-seine-eigene-partei-dafuer-ld.1922427
Supplementary Sources:
- Swiss Defence Department (VBS): Message on Military Financing 2026
- Parlament.ch: Debates on Relief Package 2027 and AVS-13
- State Secretariat for Finance (SIF): VAT tables and constitutional provisions
Verification Status: ✓ Facts checked on 28.01.2026
Footer (Transparency Notice)
This text was created with the support of Claude (Anthropic).
Editorial responsibility: clarus.news | Fact-checking: 28.01.2026
Original source: NZZ | Publication date: 28.01.2026