A triple 'no' blow.

Swiss voters gave a thumb down to all three proposals presented by the government at the ballot box on May 16.

The Swiss populace has once again shown that it is in a position to twist the arm of politics directed by the country's Federal Council and Parliament.

The Swiss Federal Council and Parliament came up short all across the board at the second round of federal referendums held on May 16. Two thirds of the voters emphatically rejected all three of the proposals put forth by the government. These proposals included:

* change in the federal law governing the country's old-age and survivor's insurance (known as the AHV), or the so-called 11th AHV revision;

* the federal government's resolution of October 3, 2003, calling for an increase in the value-added tax to help finance the AHV/IV; and

* the federal law of June 20, 2003 on revising the tax code in the areas of personal income tax on married couples and families, residential property tax and securities sales tax--the so-called tax package. (The proposal had intended to lower taxes)

The Outcome

Some political pundits regard the outcome of the vote as a dear verdict by the people, signalling to the Swiss government that politics is unlikely to cruise too fast, too furious down the right-wing side of the road.

The citizenry, noticeably slapped down the three proposals served up at the ballot box, leaving the government somewhat awe-struck and forcing the proponents of the financial reforms to go back to the political drawing board.

The threefold defeat of the Federal Council's proposals is unique, at least with respect to the recent history of Swiss politics. For the first time, three directives offered by the government were rejected by all 26 cantons. The last time that the executive branch was dealt such a blow was nearly 20 years ago, coincidentally on March 16, 1986, when the voters and all of the cantons turned down the government's move to join the United Nations Organization, which some say was a missed opportunity for enhancing the country's role on the worldwide political stage. Still, at that time the Federal Council suffered merely one defeat.

Adding insult to injury, it was also the second time this year that the government came away empty handed at the ballot box. Already at the first round of referendums held on February 8, the Swiss people went against the will of the Parliament and Federal Council, on all three proposals that were presented by the government. It seems that voters throughout the country are sending a strong signal to the politicians in Bern so far this year.

The Numbers Behind the Vote

Voter turnout came in at 50.3 per cent, which is actually regarded as an above-average number for Swiss federal referendums. By the greatest margin of 68.6 per cent, voters trounced the proposal for raising the value-added tax by one percentage point to underpin the federal health insurance scheme. Precisely 1,650,934 people said 'no' and 756,917 'yes' to the directive. By a margin of 67.9 per cent, voters rejected the 11th AHV revision, with 1,634,326 opposed and 772,964 in favour of the revision. And 65.9 per cent of the populace turned down the so-called tax package, at a ratio of 1,585,708 to 821,683.

Cantons Emerge Victorious

The rejection by all 26 of Switzerland's cantons truly took the federal government by surprise. In an unprecedented show of force, some cantons had banded together in the run-up to the referendum to oppose the federal government's tax package.

On another historical note, it was the first time since 1874 that the cantons had succeeded in exercising their right to call for a referendum, evoking the separation of powers between the federal government in Bern and the country's cantons.

The Implications

It was meant to be a decisive turnaround in the Swiss government's financial and social security policy, but the citizenry had the last word.

Lower taxes could have provided financial stimulus, which, in turn, would create more jobs and help drive the sluggish domestic economy in the long term as well. The primary gnat of the 11th AHV Revision was to ensure the financial security of the federal pension scheme in the medium and long term, since the economic downswing in recent years has exacerbated the problem of financing social insurance. In the wake of the rejection of the tax package, in Particular--which would have led to direct federal and cantonal tax savings of roughly CHF2.3 billion Swiss francs a year--one thing is dear: advocates as well as opponents of the proposal agree that reform is requisite for maintaining stability of the country's financial picture.

Finance Minister Hans Rudolf Merz and Social Minister Pascal Couchepin are now hastily striving to introduce two new proposals relating to partial revision of the securities sales tax and boosting the value-added tax for helping to finance the federal disability program (IV).

What Next?

Swing right? No thanks. Some political pundits say that's the message that Switzerland's voters sent to their government on that mostly sunny Sunday of May 16.

The weather may have even helped to boost voter turnout. Or, was it really issues involving the pocket book that lured so many voters to the referendum that day? It had been a long time since the citizenry faced propositions portending such financial significance for the nation. Perhaps they were simply not prepared to take such giant steps toward reform.

And what about all those billboards touting 'yes, yes, yes' (Ja Ja Ja) to the three proposals laid on the table by the government? The conservative Swiss Peoples Party (known as the SVP), which had called for a 'yes' to the 11th AHV revision and to the tax package, did suffer an embarrassing defeat at the referendum.

The real story behind the vote: It seems that 'Direct Democracy' ivied at the ballot box this time round. The outcome showed that Swiss politics cannot veer too far to the right without the citizenry behind the wheel.

Many foreigners living in Switzerland were also keeping a dose eye on Swiss politics on this occasion. Why? Taxes, among other things. Another reason is that the chance to vote your conscience on the issues of the day is taken for granted sometimes. A lot of foreigners don't have it so good back home. In the US, 50.3 per cent of the popular vote could even get you elected President of the United States. In Switzerland, when it comes to money matters, people tend to flock to the voting booths, but most are still unaware of who the president of Switzerland is this year (Joseph Deiss). Viva 'Direct Democracy.'