Swiss parliament backs tax hike for wealthy foreigners

Switzerland will keep its special low-tax deals for wealthy foreigners such as music and sports celebrities but increase the amount of tax they pay following a vote by parliament which faced pressure to scrap the system.

The lower house of parliament voted late on Wednesday to reject a proposal by the centre-left Social Democrats (SP) to scrap the tax breaks but adopted a government plan to raise the tax most rich foreigners have to pay.

"With this reform, we want to improve and strengthen the acceptance of the flat-rate tax," Swiss Finance Minister Eveline Widmer-Schlumpf told parliament, adding it would mean that 80 percent of those involved would pay more tax after the changes.

Switzerland has attracted more than 5,000 wealthy foreigners to settle in the country with tax deals based on the rental value of their property rather than their actual income or wealth, on the condition that they do not work in the country.

Among those to take advantage of the scheme are Formula One driver Michael Schumacher and pop stars Phil Collins and Tina Turner as well as Switzerland's richest man, furniture store Ikea founder Ingvar Kamprad, who moved to the country from Sweden in 1976.

Opposition to favourable treatment for tax exiles has been growing in Switzerland, with the cantons of Zurich, Schaffhausen and Appenzell scrapping the policy in recent years after popular referendums on the issue.

The canton of Bern is set to vote on the issue on September 23. It includes the Alpine resort of Gstaad, which has a reputation as a playground for the rich and famous including French rocker Johnny Hallyday and Formula One supremo Bernie Ecclestone.