Increase in Property Rental Prices Examined
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In Switzerland, a unique taxation system known as the imputed rent has been in place for many years. This system, which is considered a form of income for tax purposes, is similar to non-monetary benefits received as part of a salary.
The imputed rent is levied on homeowners who declare a fictional rent for their own house. This tax aims to ensure that homeowners, like Mr. Egli, are taxed based on their economic performance, much like tenants, such as Mrs. Müller.
The value of real estate in Switzerland has seen a significant increase in the last twenty years, with some locations tripling in value. This rise in property values, coupled with a decrease in mortgage interest rates over the same period, has led to a substantial increase in the wealth of homeowners.
However, this wealth gap between tenants and homeowners has led to social tensions. Tenants find it challenging to afford buying a house, contributing to the widening divide.
The federal constitution supports the equal treatment of tenants and homeowners. The imputed rent system is used to bridge this gap, ensuring that homeowners are taxed equally to tenants, based on their economic performance.
Critics argue that abolishing the imputed rent could lead to social tensions due to the widening gap between tenants and homeowners. They claim that the imputed rent is a contribution to justice and social cohesion, as it ensures taxation based on economic performance, as stated in Article 127 of the Swiss federal constitution.
Economists and tax experts generally praise the imputed rent as a fair system. In the case of Mr. Egli and Mrs. Müller, if Mr. Egli's imputed rent is 30,000 francs, they would be taxed equally in accordance with the federal constitution.
Switzerland is almost alone in having the imputed rent system, and others should consider introducing it, some argue, to promote fairness and social cohesion in their own housing markets. The concept of "Steuerung nach wirtschaftlicher Leistung," or control based on economic performance, is gaining traction in discussions about taxation and fairness.
In conclusion, the imputed rent system in Switzerland serves as an example of a unique approach to taxation that aims to promote fairness and social cohesion by ensuring that homeowners are taxed based on their economic performance. While the system may face criticism, its purpose is clear: to bridge the gap between tenants and homeowners and promote a more equitable society.
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