Zurich's profit tax referendum: A painful setback for the economy!

Zurich's profit tax referendum: A painful setback for the economy!

On May 18, 2025, Zurich voters rejected a reduction in profit tax. This result was particularly noticeable in the cities of Zurich and Winterthur. The decision represents a setback for the government council as well as for civil parties and business associations that had previously campaigned for tax relief. The rejection is a clear sign and is seen as a blow to the economy and Zurich as a business location.

The economically liberal camp that supported the bill was unable to prevail in this case. The decision also received particular attention from smaller communities, which had voted for an initial reduction nine years ago, but have now rejected the current proposal. A prevailing fear of potential financial shortages was decisive for the voters' negative decision.

Reasons for rejection

Opponents of the tax break argued that the city would lose 350 million francs in revenue annually, which could have serious consequences for public projects. Despite similar fears about the first cut, which turned out to be unfounded, voter uncertainty continued. The current uncertain global political situation contributes to the lack of confidence in economic growth.

In this context, it should also be mentioned that the canton of Zurich has advantages in terms of location competition, for example through excellent transport infrastructure and an international airport. Nevertheless, these positive aspects must not lead to savings being made on important infrastructure projects such as the Affoltern tram.

Corporate migration and tax relevance

The rejection of the tax reduction comes at a critical time, as the canton of Zurich has lost over 1,000 companies in the last seven years. This migration affects not only Zug and Schwyz, but also the surrounding cantons of Aargau, Thurgau, Schaffhausen and St.Gallen. The loss of businesses has led to a significant decline in tax revenue, jobs and training places.

The experience of other cantons shows that targeted tax relief can help keep companies and jobs in the region. With this in mind, the government and the cantonal council have passed a tax proposal that would reduce the profit tax rate from 7% to 6% in order to make Zurich more attractive as a business location. Corporate taxes make up around 20% of the canton's total tax revenue and are therefore crucial for financing education, infrastructure and climate protection.

The failure of the tax reduction is not only a setback for the civil forces, but also shows that the economic alliance in the canton of Zurich must develop new strategies to support small and medium-sized enterprises (SMEs) in particular. Bureaucracy remains a key obstacle for these companies, and existing measures such as the patent box and the additional deduction for research and development should be used more efficiently to reduce bureaucratic burdens.

In conclusion, it can be said that the rejection of the profit tax cut on May 18, 2025 not only represents a turning point for economic policy in the canton of Zurich, but is also an urgent wake-up call for a realignment of the economic framework. The movement for an economic recovery in Zurich should now focus on the key challenges and take proactive steps to improve the location's conditions.

For further information you can consult the reports from Zuriost and tax cut-yes.ch be called.