Much less so than in the case of the VAT. Furthermore, the pension system could be bolstered with perhaps an additional 0.1 percent. Without any bureaucracy!

If you change a tax system, you will always generate winners and losers. Who will lose out from the microtax?

A small minority – banks that deal in high-frequency trading, mainly big banks and SIX. Smaller banks as well as classic retail banking may actually benefit. Apart from that, around 99 percent of households and companies stand to profit: fewer taxes, more transparency, less bureaucracy.

Progressive taxation will stay of course: very wealthy families with an active equity portfolio will have to pay more on their trading activities in stocks and bonds, as well as trading companies, such as commodity traders, which have enormous trading volumes.

So the big banks will see the microtax as an attack on the financial market.

Yes, very likely. The question is: What do financial markets need? Transparency and stability. Confronted with so many scandals, the reputation of the banking industry is at stake.

Also, less bureaucracy and more autonomy are good things. Instead of waiting to see what Brussels and Washington tell Switzerland to do, it might be useful to be proactive. Don’t forget we once claimed that banking secrecy was here to stay. It’s gone.  For once we can demonstrate that we may be a small country, but one that has great ideas. The idea is neither left nor right, it is simply intelligent.

What happens if big banks move their business abroad because of the microtax?

Big bank managers will think twice before moving their business or headquarters abroad in order to avoid paying 0.1 percent in tax. It is a strategic decision with huge implications. There are many advantages for banks in Switzerland: excellent education, very good infrastructure, no more federal taxes – so big banks will have to decide.

«The Swiss central bank and SIX won't move to Singapore»

Smaller banks would probably not benefit (from moving abroad) in any case, because they would generate a profit from levying the tax and because they aren’t involved in high-frequency trading. So why would they want to evade the process?

How would big banks be able to avoid the tax? By moving their business abroad?

Our law proposal says that corporations are liable to pay the tax. UBS London is as much subject to it as Credit Suisse in New York. If the U.K. were to introduce a microtax, then the bank branch based in the U.K. would have to pay only once, in the U.K.

But outsourcing would still pose a big threat to the Swiss tax system?

Let me give you an extreme example: let’s say that 80 percent of all electronic transactions disappeared. But 47 billion francs a year is required to abolish the three taxes. With 0.1 percent we would generate a mere 20 billion. So, we simply have to charge 0.25 percent. And it is still a microtax.

«We don't want to introduce yet another tax – we have more than plenty of those»

And many transactions will stay. The central bank and SIX will certainly not move to Singapore.

What happens in the time of an economic crisis?

The system would be more resilient. Companies would pay significantly fewer taxes! And we would have plenty of scope to adapt the tax rate. Don’t forget, firms will no longer pay the main federal taxes. How much they will pay in microtax depends on their transaction volume. For most industries, the balance will be positive. The abolition of VAT, in particular, will be a big advantage.

What’s the difference between the microtax and the Tobin Tax?

There are two main differences. First, it includes all electronic transactions and not just those in the financial markets. That’s why the volume is so much higher. And secondly, it is not our aim to introduce yet another tax – we have more than plenty of those. Our aim is to first reduce those other taxes and then to abolish them. This is much more ambitious.

Shouldn’t we work to pursue a common tax policy with other countries?

Being proactive will allow Switzerland to gain a first-mover advantage. Company representatives in Germany and France will understand that Switzerland is even more stable than it used to be, more advantageous, more transparent and with even less bureaucracy: they might think it is well worth being active in Switzerland.

Do you have the support of political parties for your initiative?

We want to contact all of them. There are people in favor in all parties, and those who dislike the idea as well.

«You don't need a degree in law or economics to understand our initiative»

The initiative is neither right nor left. If a party wants to support us, it is obviously welcome. But our initiative won’t be one of a single party. We don’t want to be pushed into a left- or right-wing corner.

An idea developed by academics for the general population needs great communication. What’s your plan?

We need to be able to think complex and talk straight-forward. We have sent one page to Bern. The tax code of the U.S. has 75,000 pages. So, you don’t need a degree in law or economics to understand our initiative.

The text is ready. What are your next steps?

The budget is obviously an important issue. As we have no party supporting us, we don’t have their financial backing.

«Switzerland has an advantage from being outside the European Union – we can discuss such a topic»

We will see whether we can find the funding to launch the campaign. We hope that some companies, in particular SMEs, political parties, and unions will want to work with us.

Do you believe that the financial crisis may yet help you with your initiative?

Of course. The reasons for financial imbalances include a huge amount of non-transparent transactions as well as dubious business activities. We have to shed light on this! The microtax will start an interesting discussion. This is only possible in Switzerland and not abroad.

Our country has an advantage by being outside the European Union – we can discuss such a topic. We have much more political leeway outside the EU.

When will you begin collecting signatures?

We only need to meet one more precondition and that’s the financial one. If we can reach our budget targets soon, we will start collecting in November, right after the general elections.


Marc Chesney, 60, is a professor of quantitative finance. He's been head of the Department of Banking and Finance of the University of Zurich since 2003. Chesney studied mathematics and econometrics in Paris and Geneva. He's the author of several books. His latest book was «A Permanent Crisis», published by Palgrave Macmillan in 2018.