Switzerland plans to raise its value-added tax (VAT) by 0.8 percentage points-from 8.1% to 8.9%-over a ten-year period starting in 2028, to fund a major military rearmament program. The move, announced by the Swiss Federal Council, aims to address severe deficiencies in national defense capabilities, particularly in response to evolving security threats such as long-range strikes and hybrid warfare. Revenue from the VAT increase will go into a dedicated defense fund, enabling the purchase of new equipment, cyber defense development, and electromagnetism infrastructure upgrades. Despite increased military spending and closer cooperation with European partners since Russia’s invasion of Ukraine, Switzerland reaffirmed it has no intention to join NATO. Currently, defense spending stands at just 0.7% of GDP, well below the 1% target. The government will seek public approval through a constitutional referendum before implementing the change.

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