Zurich: In a significant policy shift, Switzerland has announced plans to sharply increase its defense budget, financed through a temporary hike in the country’s value-added tax (VAT). The Federal Council, citing rising global instability, outlined a strategy to allocate 31 billion Swiss francs (approximately $40 billion) toward strengthening national security over the next decade.
Officials emphasized that the move is a response to an unpredictable international environment, characterized by ongoing conflicts, heightened geopolitical tensions, and evolving security threats. “The world has become more volatile and insecure, and the international order based on international law is under strain,” the Federal Council said in an official statement.
Switzerland’s military has traditionally maintained a modest budget, reflecting the nation’s long-standing policy of neutrality. However, recent developments, including Russia’s invasion of Ukraine and escalating strategic competition between global powers, have prompted Swiss leaders to rethink defense priorities. The new spending plan aims to accelerate modernization, addressing both traditional military needs and emerging security challenges such as cyber threats, electronic surveillance, and border protection.
To fund this expansion, the government proposes raising the VAT by 0.8 percentage points for ten years. This temporary increase is designed to cover the costs of procuring modern equipment, upgrading IT and cybersecurity infrastructure, and enhancing the capabilities of police and border forces. Officials noted that inflation and rising international demand for defense technologies have made the previous budget insufficient for meeting future security requirements.
The proposal now faces scrutiny in the Swiss Parliament and will likely be subjected to a national referendum in 2027, in line with Switzerland’s system of direct democracy. Supporters argue that the measure is essential for protecting Swiss sovereignty and preparing the nation for emerging threats, while critics question whether increased military spending aligns with Switzerland’s neutral stance and the economic impact of a VAT hike on citizens.
Switzerland’s move mirrors a broader trend across Europe, where countries are reassessing defense investment in light of new threats. From NATO members to traditionally neutral nations, governments are balancing fiscal responsibility with the need to maintain modern and responsive military forces. Analysts suggest that Switzerland’s decision may set a precedent for other neutral countries reconsidering their security strategies in a rapidly changing global order.