Lucerne’s fiscal equalisation system to become more stable and solidary
Lucerne - On 18 May 2025, the people of Lucerne will vote on a partial revision of the cantonal Fiscal Equalisation Act. The aim is to strengthen solidarity between municipalities and restore balance to the system in light of uneven tax revenue developments.
Lucerne’s fiscal equalisation system is facing a key reform. A partial revision of the cantonal law aims to stabilise the system and strengthen solidarity among the municipalities. The people of Lucerne will decide on the proposed changes at the ballot box on 18 May 2025.
The revision responds to highly uneven tax revenue developments across the canton. While tax income has increased significantly overall, some regions have seen sharp fluctuations. This has led to a disproportionate rise in redistributed funds, resulting in inequalities between municipalities and additional costs for both the canton and the donor municipalities. A particular concern: even donor municipalities with stagnating tax revenues are required to contribute significantly more to the equalisation system – a development that, according to Finance Director Reto Wyss, threatens intermunicipal solidarity.
To address this, the Lucerne Cantonal Parliament adopted a partial revision of the law on 2 December 2024. The revision includes three key measures:
- Capping the growth of the resource equalisation at a maximum of 10 percent per year and making the minimum funding level more flexible.
- Decoupling resource and burden equalisation, preventing excessive payments to individual municipalities.
- Standardising contribution rates for donor municipalities with central functions and increasing infrastructure burden compensation by CHF 10.6 million.
These measures aim to curb the rapid growth in redistributed funds and reduce the financial pressure on donor municipalities and the canton. At the same time, recipient municipalities will still receive significantly more support compared to the current system – ensuring that all parties benefit from the revision.
The cantonal parliament and the government both recommend approving the proposal. The partial revision was passed in parliament with a strong majority (110 votes in favour, 2 against, 3 abstentions). All political groups agreed that the revision is a well-balanced compromise and a temporary solution. There is broad consensus that a complete overhaul of the fiscal equalisation system will be necessary in the near future.
The cantonal government believes this revision is a reasonable and timely response to current developments in tax revenues and urges voters to approve the proposal.
Background: What is fiscal equalisation?
Not all municipalities in the canton of Lucerne have the same financial strength. Peripheral regions, in particular, tend to be less attractive as business locations, which affects their financial capacity. The resource equalisation mechanism ensures that all residents have access to comparable public services, regardless of where they live. Wealthier municipalities and the canton contribute to balancing financial disparities. Additionally, burden equalisation provides support to municipalities facing above-average costs due to their location or demographics. The proposed revision aims to future-proof this important system of solidarity.
Source: Statement Canton of Lucerne, 14 April 2025
