Swiss approve higher VAT tax

Swiss voters in a majority of cantons approved a seven-year increase in value-added tax.

Swiss voters in a majority of cantons approved on Sunday a seven-year increase in value-added tax to help cover a shortfall in the nation's federal disability insurance system.

By a vote of 54.5 percent, with 12 cantons in favour and 11 against, they gave a green light for the tax to go up to 8.0 percent -- it is currently 7.6 percent -- from January 2011 until the end of 2017, officials said.

A reduced tax on essentials will meanwhile nose up to 2.5 percent while a special hotel tax will rise to 3.8 percent -- altogether generating 1.1 billion Swiss francs (730 million euros, 1.1 billion dollars) a year.

The federal disability insurance regime is 13 billion francs in debt, and so far the government has been using money from the old-age pension scheme to cover the shortfall.

French- and Italian-speaking cantons supported the tax increases in Sunday's referendum, while German-speaking ones were opposed.