BERN - The Council of States voted on Monday to create a fund of CHF 24 billion that can borrow, so the army can buy equipment without waiting on each annual budget. The defence ministry said the chamber kept the total the Federal Council had asked for, then rewrote how the money arrives.
Senators renamed the vehicle the Fund for Security and Defence. It would pay for army procurement, including a further long-range ground-based air defence system the government has already flagged. The political argument is no longer whether extra money is needed. It is which taxpayers, and which years, should provide it.
VAT, loans and an 18-year life
The Senate wants a temporary rise in value added tax of 0.2 percentage points on the standard rate and 0.1 points on the special rate. The fund would also take half of ordinary federal surpluses, plus deposits from the general budget, split between earmarked and non-earmarked payments.
To cover spending peaks, the Federal Finance Administration could lend the fund money that must be repaid by the time the fund closes. Senators set that loan ceiling at CHF 12 billion, double the CHF 6 billion the Federal Council requested. From the eighth year the ceiling would fall by CHF 1.2 billion a year.
The chamber also lengthened the fund by six years, to 18 years in all. It wants any referendum on the fund law separated from the obligatory vote on the VAT increase. In the Senate's reading, the package still respects the debt brake. Voters could reject the tax rise and leave parliament to find the money another way.
What the Senate refused
The upper house rejected plans to fill the fund with billions of cuts in the federal budget, with substance dividends from the Swiss National Bank, or with a wealth tax. The defence department said the broader mix should let procurement start sooner than a tax-only plan.
The defence ministry said the Senate considers extra procurement finance indispensable because the security position has worsened. The National Council has not yet agreed. The bill now goes to the lower house. That is the same autumn session that opened on 14 September with army money already on the order paper. Our 11 September briefing set out the CHF 24 billion figure before senators rewrote the tax and the loans. The neutrality initiative, due on 27 September, sits beside this debate but does not decide it. A guide to that ballot is in Sunday's voter note.