This Sunday the 17th March, there will be a local vote on an increase in Nyon taxes.
Readers may have seen posters around the town saying “oui” or “non”, both for and against this proposal. So what does it all mean?
“Two years ago the people of Vaud voted for the RIE3 which reduces corporate taxation to about 13%. Nyon has a lot of corporations, so it will receive about CHF 12 Million less in revenue from them in 2019. There was supposed to be a matching federal law but it hasn’t passed yet (there will be a vote on this on May 19) and it’s still not sure it’ll pass because it combines AVS reform with a reduction in corporate taxation.
As a result of the deal made between the socialists and the PLR, corporations got a tax cut and in exchange, cantonal social benefits increased, so 50% of the increase has to be borne by the towns (so-called “facture sociale”). This further increases Nyon’s operating expenditures.
In addition, the increase in the amount paid by Nyon to the “péréquation cantonale” (cantonal redistribution system whereby “rich” towns like Nyon subsidise “poor” villages and towns) increased beyond the additional tax revenue gleaned from Nyon’s many new (and mostly affluent) residents.
The result is a budget deficit of about CHF 17 Million if nothing is done. The Municipality agreed to cut town operating expenditures by about CHF 3 Million in exchange for a tax increase of 4 pts (your tax à compte bill already reflects this), which would bring down the deficit to “only” CHF 8 Million.
The deficit has little or nothing to do with investment expenditures, which are mainly funded through borrowing. Nyon’s free cash flow is only around CHF 5 Million, which is a pittance compared to its annual investments of the order of CHF 100 Million. Because interest rates are low and the town is considered a good credit risk, the town can borrow almost for free, but when rates inevitably go up, the town will get hit.
The “no” campaign is refusing the tax increase as they to want to express their disapproval to the municipality for certain decisions (e.g. the temporary installation planned for the Place du Château), but they’re confusing oranges with apples. These things come out of the investment budget, not the operating budget (except for maintenance of these installations once they’re in place).
If the tax increase is refused, the town will have to borrow money to pay for current expenses, which is like using a credit card to pay off a credit card bill.
It’s difficult to give a full and complete explanation but I’d say the root cause is the passage of the (cantonal) RIE3 and the non-passage of the (federal ) RIE3. When we voted for the former, by a large majority, they promised us that it would be without effect for individual taxpayers (you and me), but it didn’t turn out that way. The main reason that the federal law proposal is a package deal with allocates funding for the AVS while reducing taxes for corporations, which violates a principle called “unité de la matière” according to which you can’t mix two different subjects in the same law”.