One of Banque Lombard Odier & Cie SA’s top bankers criticized a proposal for an inheritance tax on the superrich, saying it could trigger an exodus of wealthy families even before it’s put to a vote.
The initiative by the youth wing of the country’s Social Democratic Party calls for a 50% tax on inheritances worth more than 50 million francs ($59 million). Under Switzerland’s system of direct democracy, the proposal is expected go to a national vote in about two years.
“We feel like this initiative is counterproductive for the country,” Frederic Rochat, a managing partner at Lombard Odier, told journalists Wednesday. “This is leading many individuals who could potentially fall under the scope of the text to wonder whether they should be taking some contingency measures before it is voted, including a potential move out of Switzerland.”
Switzerland, known globally for its role as a private banking hub, is in the midst of a heated debate about inheritance taxes as increasing amounts of wealth are being passed on to the next generation. The Alpine country currently doesn’t have an inheritance tax at the federal level, though some cantons — as the states are called — impose levies.
The proposal comes just as the prospect of higher taxes on the wealthy in the UK and France prompted speculation that Switzerland could benefit. In the UK, the government is considering changing the taxation of carried interest, a major source of income for private equity managers.
“This initiative can also make Switzerland less competitive at a time when wealthy residents in other countries are currently reviewing their residency options,” said Rochat, a former Goldman Sachs Group Inc. banker who leads Lombard Odier’s private banking business.