Swiss village wins tax break thanks to billionaire
Published 08/12/2011 | 00:00
Residents in the Swiss village of Rüschlikon are celebrating an unexpectedly generous Christmas tax break thanks to billionaire Ivan Glasenberg, the head of commodities giant Glencore, who lives there.
The village council voted this week to cut locally levied income tax from 79 to 72 per cent after finding the municipal coffers had amassed a Sfr60million (£41m) surplus, amounting to Sfr12,000 (£8,300) for each of the community’s 5,200 residents.
The substantial windfall was both a product of Mr Glasenberg’s wealth and the Swiss tax system which obliges taxpayers to contribute to both their local authorities and central government.
The $11bn flotation of the Swiss commodity group, Glencore, in May this year turned Mr Glasenberg into a multi-billionaire.
Rüschlikon, which is on the northern shores of Lake Zurich, does not get as much sun as its super rich opposite number - the so-called "Gold coast" on the lake's southern shore - which is home to countless million and billionaires.Yet it is home to several Glencore executives.
Mayor Bernhard Elsener said after the tax break was approved by the village council the reduction was “directly linked” to Glencore’s flotation.
However he rejected demands from leftwing and church campaigners that the town should donate one million Swiss francs of the windfall to compensate communities in developing countries, which they claim have been adversely affected by Glencore's operations.
The commodities giant has been criticised by environmental and corruption campaigners for transactions carried out in Third World countries such as Zambia and Colombia. Glencore's critics argue that it is guilty of encouraging mining companies to plunder poor countries rich in natural rescources but with weak governments.
"The people of Rüschlikon prefer to demonstrate solidarity in private rather than via the muncipality," Mr Elsener said.
The village council approved the tax break after exercising the Swiss direct democracy a system, which dictates that decisions are first taken directly by resident voters on the spot. Mr Elsener said the tax break vote attracted an unusually good turnout of some 424 voters.
Their numbers were increased by protesters from local church and leftwing organisations demanding a Third World compensation payment. The protesters distributed leaflets claiming that Glencore's business practices were "unfair and not sustainable." However their demands were voted down by a large majority.
Mr Glasenberg's 15.8 per cent stake in Glencore was worth around $9 billion on flotation. The South African born executive was granted Swiss citizenship last December and is rated as the country's eighth wealthiest person with a fortune worth between six and seven billion Swiss Francs.
Both Glencore and Mr Glasenberg refused to comment on Ruschlikon's decision to cut taxes. However the company rejected charges that its business practices exploited Third World countries. " Glencore applies strict standards at its operations around the world," a spokesperson insisted.
Swiss observers have pointed out that Ruschlikon has a vested interest in retaining its wealthy residents and doing as little as possible to offend them.
Mr Glasenberg has lived in the village in the canton of Zurich since 1994. Yet if he wanted to retain more of his fortune, Mr Glasenberg could simply move to Canton Schwyz, which starts just a few kilometres along the shores of lake Zurich and boasts the lowest taxes for the rich in Switzerland.