Swiss shoppers spend 10 billion francs a year abroad. Now parliament has lowered the ceiling on goods that can be imported tax free from CHF 300 to just CHF 50. In an article for the German magazine “Landfreund”, Avenir Suisse’s Patrick Dümmler explains why the move is ineffective and what should be done instead.
The fun is going out of cross border shopping for the Swiss. No less than three parliamentary motions have recently addressed the issue of ‘shopping tourism’, arguing Swiss businesses suffer from unwelcome competition from their foreign neighbors.
Even though competition – including border hopping to buy many items far more cheaply than in high price Switzerland – may not suit Swiss retailers, their complaints smack of hypocrisy, given they themselves are unlikely to select the highest price suppliers for their own businesses.
Prices, selection, and experience
But why do so many Swiss like to shop in neighboring foreign countries? For a start, prices are much cheaper: food and non-alcoholic drinks are 80 percent dearer in Switzerland than in Germany, and just under 50 percent pricier than in Austria. Among other reasons are wider, or different, choice and the shopping experience in itself. And for some, particularly in immediate border regions, going abroad is plain habit.
Switzerland’s planned change is unlikely to curb shopping tourism, as the underlying reasons are too strong. Lowering the VAT free import ceiling to CHF 50 a head raises the cost of imported groceries by just 2.5 percent, or 1.25 Swiss francs. It is doubtful whether the revenues generated will even cover the costs of the extra border controls, tax calculations and collection required. It is even more doubtful that a net tax substrate will be generated – the reason behind the plans.
Tackling the causes, rather than making a gesture
The reasons for shopping tourism are home grown. Swiss tariffs and other barriers to foreign agricultural imports are the highest in the world and should be dismantled. Moreover, competition spurs innovation: protected industries tend to become rigid, and often call for further state help when times get tough.