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. Last Updated: 07/27/2016

Swiss Face Tax Hike to Beat Deficit

ZURIC, Switzerland -- Swiss taxes may have to rise to help close a swelling federal budget deficit that could widen to 4 billion Swiss francs ($2.95 billion) this year, the country's finance minister Kaspar Villiger said Friday.

"The way things are now, we are unable to rule out tax increases if revenue weakness turns out to be in part structural," he said in remarks prepared for delivery to his Radical Democrats party.

The global economic downturn and slump on stock markets have eroded revenue at a tremendous clip, he said, while parliament keeps trying to spend at will.

He rejected appeals to ease his strict fiscal plans and stimulate a sputtering, export-dependent economy that has been hamstrung by the safe-haven Swiss franc's strength and by fading private consumption.

"The federal budget is very expansive at the moment. This year's deficit could be three to four billion" francs even excluding shortfalls in separate funds for unemployment insurance and financing rail tunnels through the Alps.

"That gives a deficit of some five to six billion and [an extra] fiscal stimulus of more than one billion compared to a year ago," Villiger said.

The federal budget ran a deficit of 3.3 billion in 2002, excluding one-off revenue as income dried up amid the economic slump. The original 2003 budget had penciled in a small surplus that officials say will now not be possible.