Vaud cuts taxes by 12%, government now seeks savings

Vaud voters have approved an initiative calling for a 12% cut to cantonal taxes on the income and wealth of individuals. The reduction, in force from 1 January, is expected to cost the canton an estimated 272 million francs a year in lost revenue.

The initiative's backers have promised that public services will not be affected. Several institutional actors are nonetheless preparing for possible cuts while they wait for the government's decisions.

Three months to find the money

The Vaud cantonal government has three months to draw up the 2027 budget and indicate where it will act in response to the drop in revenue. The executive has given itself two weeks to present its proposals to the cantonal parliament.

Medico-psycho-social institutions are among the most exposed. Their president, Jean-Luc Andrey, is asking to be involved in the decisions early on: “Nel 2025-2026 siamo stati messi davanti al fatto compiuto, il giorno stesso della presentazione del bilancio. Non vogliamo che si ripeta: chiediamo di essere consultati, qualunque sia la decisione sulle nostre istituzioni” (In 2025-2026 we were presented with a fait accompli on the very day the budget was announced. We don't want that to happen again: we are asking to be consulted, whatever the decision affecting our institutions).

Vaud's municipalities are also watching closely, since they directly manage many services for residents. Chantal Weidmann-Yenny, the Liberal (PLR) president of the Union of Vaud Municipalities, points to the risk that the drop in cantonal revenue could fall on municipal budgets: “Non vorrei che fossero i Comuni a colmare il deficit di entrate” (I would not want the municipalities to be the ones covering the revenue shortfall). She points to the need for joint work between the canton and the municipalities, for instance on regulations for infrastructure projects and on housing.

On the union side, SSP Vaud says it is ready to mobilise if the tax cut leads to reduced services. Union secretary Catherine Friedli warns: “Se taglieranno, risponderemo con la mobilitazione. Già adesso mancano i mezzi per garantire il funzionamento dei servizi pubblici, sia in termini di qualità sia di condizioni di lavoro del personale” (If they cut, we will respond with mobilisation. There are already not enough resources to guarantee the running of public services, both in terms of quality and staff working conditions). The public-sector staff assembly is set for 8 October, in the middle of the election campaign: in February, Vaud will renew its parliament and government.

A basic question remains open: how the canton intends to reconcile lighter taxation for households and taxpayers with maintaining current public services, and what efficiency gains in cantonal spending could absorb the lower revenue without new burdens for municipalities and businesses.