The situation is serious, and without intervention, it risks dragging the canton’s finances into a downward spiral. All the speakers at the final roundtable of the “Taxation of Tomorrow” event - organized by SUPSI’s Tax & Legal Competence Centre (CCTG) on May 4 at the LAC in Lugano - agreed on this point. Public finances could face deficits estimated at 600 million francs starting in 2029. Numerous factors are at play: first and foremost, the financing of the two health insurance initiatives; then there are the federal government’s cost-cutting measures imposing new burdens on the cantons, the failure to adjust fiscal equalization, the uniform financing of hospital and outpatient services (EFAS), the elimination of the rental value deduction, and new burdens that, when added together, lead to this potential outcome, in a global context marked by uncertainty. In short, a perfect storm.
Last April, the State Council presented an initial package of measures to finance the two health insurance initiatives approved in the popular vote on September 28, 2025, totaling 50 million francs, divided equally between new revenue and expenditure reductions. On the revenue side, the most significant measure involves a temporary 0.5‰ increase in the property tax rate. On the expenditure side, the main cuts target public transportation and contributions to the cantonal academic center.
This is an initial proposal that will necessarily be followed by others with greater impact. While there is broad agreement on the principle, reaching consensus among political forces on the method is more difficult.
Renato Mondada, Head of the Chancellery of the Taxation Division, outlined to the audience the State Council’s proposals for funding the popular initiatives on health insurance and their impact on cantonal finances
Where should we focus on revenue?
From a purely technical standpoint, there is no shortage of opportunities to increase tax revenue. In his introduction to the roundtable, the head of the CCTG, Prof. Dr. Samuele Vorpe, outlined potential new sources of revenue through tax policy. Specifically, six measures of varying nature and impact were identified.
“The framework has completely changed with the passage of the two popular initiatives. Therefore, measures are needed not only on the expenditure side but, above all, on the revenue side. There are various possibilities, but it will by no means be easy to reach a political consensus—which must, however, be achieved,” Vorpe begins.
“Among the possible measures is, first and foremost, the revision of property valuation standards, whose principle of neutralization in view of future revisions will be subject to a popular vote next June. I am also considering an increase in the tax burden on cross-border workers through a revision of the granting of social deductions; the introduction of a differentiated cantonal tax rate between individuals and legal entities; the use of direct subsidies in the form of tax credits for virtuous companies, in exchange for an increase in the corporate income tax rate; as well as the abolition of the exemption for direct ascendants and descendants for the purposes of inheritance and gift taxes. There is also the State Council’s proposal to increase the cantonal wealth tax rate from 2.5 to 3 per thousand. Finally, the possibility remains open to increase the cantonal tax coefficient, currently set at 100%. In short, one could also envisage a combination of these measures. The essential point is that policymakers seriously address the issue of financing the two initiatives.”
Marco Bernasconi, professor at SUPSI, is one of the panelists
Revaluation of Property Appraisal Values
Property appraisals in Ticino are conducted every twenty years. This process allows for an update, bringing the appraised value more in line with the market value (the potential market price). The assessed value is used not only for tax purposes but also to determine eligibility for certain social benefits (scholarships, nursing home fees, health insurance subsidies, etc.): there are 32 legal provisions that refer to it.
Accepting the State Council’s proposal, the Grand Council decided to postpone the general revision of assessed values from 2025 to 2035, while introducing an extraordinary update of assessed values through a linear 15% increase, already included in the 2026 budget.
According to the latest figures provided by the State Council last April, the market value of Ticino’s real estate portfolio is 2.284 times the official assessed value. The future update is expected to generate additional revenue estimated at 431 million francs (404.5 million in additional taxes, 25.5 million in reduced subsidies). Nevertheless, a sudden increase of this magnitude would be unsustainable for taxpayers, penalizing for first-home owners, and politically unpopular. For these reasons, mitigation measures can be envisaged, such as, for example, doubling the property tax exemption threshold (which could rise from 200,000 to 400,000 francs) or the possibility of differentiating the tax assessment of primary residences, as is done in the Canton of Lucerne.
Gianluigi Piazzini, President of the Ticino Chamber of Real Estate (CATEF)
The revision of property valuations will also be the subject of a popular vote on June 14. The public will be called upon to vote on the constitutional initiative “Yes to Neutralizing the Increase in Valuation Values.” This initiative stipulates that a general revision should not automatically lead to an increase in tax revenue or a reduction in benefits, aid, and subsidies, thereby requiring the legislature to intervene to ensure an overall balance.
In relation to this proposal, a question of equal treatment arises with respect to movable assets: while mechanisms to neutralize the tax effects of value increases are proposed for real estate, no similar treatment is provided for financial assets, whose increases are directly reflected in taxation.
The value of the real estate stock tends to increase over time. However, an increase in the tax burden on property owners affects multiple economic and social aspects and is particularly complex to implement from a political standpoint.
Social Deductions for Cross-Border Workers
Starting in 2029, with the abolition of the imputed rental value, it will be more difficult to deny “quasi-resident” status to cross-border workers. According to a 2010 Federal Supreme Court ruling, anyone who earns 90% of their income in Switzerland may request ordinary taxation instead of withholding tax. Furthermore, with the introduction of the Federal Act on Individual Taxation, it will no longer be possible to take the spouse’s income into account on a flat-rate basis for the withholding tax rate. This regulatory change will have a negative impact of 20 million.
Given these circumstances, it might be possible to adjust social deductions by granting them only to taxpayers with children residing in Switzerland or denying them to non-resident taxpayers, provided the latter can claim their personal circumstances in their country of residence. With certain amendments to the Tax Law of the Canton of Ticino (LT) and/or the Federal Act on the Harmonization of Direct Taxes of the Cantons and Municipalities (LAID), it would be possible to exclude social deductions from the calculation of withholding tax, the impact of which is significant in any case.
Based on an initial estimate, for so-called “old cross-border workers,” the measure would lead to a conservative increase in tax revenue of at least 20 million francs. At present, however, the impact of this change on “new cross-border workers” cannot be quantified, as their numbers are still limited, but the amounts would tend to rise over the years, generating additional revenue.
The measure could find domestic support, but it could clearly create friction in relations with Italy and affect cross-border cooperation.
Double cantonal tax multiplier
Aargau, Bern, Fribourg, Geneva, Graubünden, Neuchâtel, St. Gallen, Schaffhausen, Schwyz, and Solothurn have a double cantonal tax multiplier: one for individuals for income and wealth tax purposes, and one for corporations for profit and capital tax purposes. This measure allows for greater policy flexibility, as it would be possible to choose which type of taxpayers to increase or reduce the rate for. It is not a true measure to increase tax revenue, but it can be used to decide from whom to demand greater fiscal sacrifices.
Ivo Durisch, Member of the Grand Council, Group Leader of the Socialist Party
Qualified Refundable Tax Credits
This is an incentive tool in response to the introduction of the OECD’s 15% minimum tax. The cantons of Graubünden, Zug, and Basel-Stadt have adopted, while Lucerne is about to adopt, the tool of the qualified refundable tax credit to boost entrepreneurial initiatives considered economically strategic. The goal is to promote economic activities that serve a significant public interest, such as research and development, ecological/environmental sustainability, the circular economy, and the technology sector, through the granting of subsidies in the form of tax credits.
The current Economic Innovation Act could be replaced with a “Law on the Promotion of the Business Sector” focused on granting qualified refundable tax credits to all companies that meet the specified criteria (research and development, adequate wages, environmental protection, etc.).
To avoid losing tax revenue, one should consider raising the corporate income tax rate, which would then be, at least in part, offset by the provision of subsidies to “deserving” companies. This is an indirect lever that would not have immediate effects on revenue and could, in the long term, foster a transformation of the canton’s economic structure.
Cristina Maderni, Vice President of the Cc-Ti, President of the Order of Chartered Accountants of the Canton of Ticino, President of the FTAF, and Member of the Grand Council for the Liberal Radical Party
Automatic Submission of Pay Statements
The proposal calls for employers to automatically submit their employees’ pay statements to the tax authorities. The aim is to reduce tax evasion. However, this measure would result in a greater administrative burden for tax authorities and employers.
Inheritance and gift taxes
In Ticino and most cantons, spouses and direct descendants are exempt from inheritance and gift taxes. Other heirs, such as siblings, grandchildren, cohabiting partners, and unrelated individuals, are subject to taxation, with maximum rates ranging from 15.5% to 35% depending on the degree of kinship. Only Appenzell Innerrhoden, Neuchâtel, and Vaud impose inheritance and gift taxes on amounts exceeding certain thresholds. Even in this case, there would be potential revenue for the state, but the measure would struggle to secure broad majorities.
Christian Vitta, State Councilor and Director of the Department of Finance and Economy (DFE)
Policy Choices
“All the measures proposed here will inevitably have supporters and opponents. However, we should consider them from the perspective of balanced sacrifices. In my view, the automatic submission of the wage certificate is a simple measure that will undoubtedly yield benefits. However, I do not expect it to generate particularly significant tax revenue. As for social deductions for cross-border workers, one measure whose effects are set to become apparent in the coming years is denying the child-related social deduction to new cross-border workers. This category of non-resident taxpayers must, in fact, declare their income in Italy, a country that already takes their personal and family circumstances into account. It is therefore appropriate for Italy to grant such deductions, rather than Switzerland as the country of employment. Also of interest is the proposal to reward deserving companies through subsidies that reduce cantonal and municipal taxes. The aim would be to incentivize only those companies that, through specific actions, contribute to improving Ticino’s economic, technological, social, and environmental fabric. By increasing the corporate income tax rate from 5.5% to 8%, a budget of 100 million francs would be generated for the canton alone, to which an additional 80 million francs from the municipal share would be added. These amounts would then be returned to companies that meet public interest requirements identified by the cantonal legislature”.
Samuele Vorpe, Director of the Center for Tax and Legal Expertise (CCTG)
“As for the revision of property valuations, it is currently advisable to wait and see what the will of the people is in the June 14 vote. Finally, the issue of inheritance and gift taxes should be a last resort, especially considering that this tax is now being phased out in various cantons, at least as it pertains to transfers between parents and children,” concludes Samuele Vorpe.