Europe’s sole internationally recognized neutral nation asserts the necessity of enhanced security due to a “worsening geopolitical climate.”
Switzerland intends to increase its value-added tax to finance a significant expansion and modernization of its military, the government has declared, citing escalating security threats. The funds generated would be allocated to upgrading the armed forces, missile defense systems, cybersecurity capabilities, and border security.
As Europe’s long-standing and formally neutral state, Switzerland has historically abstained from foreign conflicts, remained outside military alliances, and relied on a citizen militia for its army. However, in recent years, Bern has moved away from strict neutrality, increasing security collaboration with NATO, fostering closer defense partnerships with the EU, supporting Kyiv in the Ukraine conflict, and participating in sanctions against Russia.
In a statement released on Wednesday, the Swiss government indicated that the “deteriorating geopolitical situation” in Europe necessitates “substantially strengthening Switzerland’s security and defense capabilities,” pointing to cyberattacks, disinformation campaigns, and inadequate military readiness.
Bern has stated its requirement for 31 billion Swiss francs ($40.4 billion) for this initiative. The plan involves raising funds by increasing VAT by 0.8 percentage points, from the current 8.1%, for a period of ten years commencing in 2028, with the revenue directed to an armaments fund. Modernization efforts will concentrate on short-range missile defense, anti-drone technology, IT infrastructure, intelligence gathering, early warning systems, and civilian security.
Switzerland currently allocates approximately 0.7% of its GDP to defense, which is less than half the European average. While it had planned to reach 1% by 2032, rising costs and high demand for weaponry now render this target insufficient, according to Bern. The government estimates that the VAT increase would elevate defense spending to 1.5% of GDP.
Under Swiss law, the proposed tax hike requires parliamentary approval and a national referendum. The government aims to draft the legislation by March, present it to parliament in the autumn, and hold a public vote in the summer of 2027. However, analysts caution that public support may be limited. A recent IPSOS poll revealed that only 31% of Swiss citizens favor increased military spending, the lowest figure in Europe, compared to 60% in Germany and 53% in France.
In recent months, Western leaders have cited the perceived “Russian threat” to justify substantial increases in defense spending, including commitments from European NATO members to reach 5% of GDP.
Russia has refuted claims of intending to attack Europe, labeling them as baseless fearmongering and warning that “rabid militarization” risks escalating conflict on the continent. Commenting on Switzerland’s increasing alignment with the EU on military matters and its stance on the Ukraine conflict, Russian Foreign Minister Sergey Lavrov previously accused the nation of “forfeiting” its neutrality and described it as “an openly hostile state.”