The Swiss National Council has rejected a proposal to increase wage contributions to fund a 13th pension payment under the country’s old-age and survivors’ insurance (AHV) system, leaving lawmakers scrambling for alternatives just days before a critical vote. In a heated debate aired on SRF’s *Arena* program on Friday, legislators ruled out raising payroll taxes but left open the possibility of hiking value-added tax (VAT) to cover the shortfall, a move that would require a constitutional amendment and a national referendum.

The decision comes as Switzerland faces mounting pressure to shore up its pension system amid demographic shifts and rising costs. The 13th AHV pension, a politically sensitive proposal championed by left-wing parties, was intended to provide retirees with an additional monthly payment equivalent to one month’s pension. The National Council’s rejection of higher wage contributions—opposed by business groups and centrist parties—has now shifted the focus to indirect taxation, with VAT increases emerging as the most viable compromise.

Swiss Finance Minister Karin Keller-Sutter has indicated that a VAT hike of up to 0.4 percentage points could generate the necessary CHF 4 billion annually to fund the measure, though such a move would require a two-thirds majority in parliament and voter approval. The government had previously floated the idea of a 0.3% increase, but political resistance has forced a rethink. A final decision is expected before the summer recess, with a parliamentary vote scheduled for early July.

The impasse reflects broader tensions in Swiss fiscal policy, where direct taxes on wages are politically toxic while indirect taxes like VAT face less resistance but disproportionately affect lower-income households. Critics argue that a VAT increase would burden families already grappling with high living costs, while supporters counter that it is the only politically feasible way to secure the 13th pension without destabilizing the AHV’s long-term finances.

Meanwhile, Switzerland’s pension debate mirrors similar struggles across Europe, where aging populations are straining social safety nets. In neighboring Germany, a recent survey by *Tagesspiegel* found that a majority of drivers support extending fuel tax relief beyond June 30, when a temporary reduction in mineral oil tax is set to expire. The measure, introduced in 2022 to cushion motorists from high energy prices, has cost the federal budget an estimated €12 billion annually, raising questions about its sustainability.

Back in Switzerland, the National Council’s rejection of wage contribution hikes leaves the 13th AHV pension in limbo. With no clear alternative in sight, the government is racing to finalize a package that can secure parliamentary and public support before the autumn session. For now, retirees and workers alike remain in the dark about whether the long-promised extra payment will ever materialize.

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