After Liechtenstein decided to shed its image as a tax haven, tax revenues have come down. The resulting budget cuts and tax increases are weighing on the minds of the alpine country‘s 19,200 eligible voters as they elect a new parliament Sunday in one of Europe‘s smallest nations. The election also spells the end of Premier Klaus Tschuetscher‘s term in office – his first and last after he said he would not run again. Under Tschuetscher‘s guidance, Liechtenstein decided that its banks and asset managers would follow a “clean-money strategy” by signing bilateral tax agreements with other governments that make it harder for tax evaders to park their assets in the country.
The change has hurt the public finances of the principality that is nestled in the Alps between Austria and Switzerland as untaxed money was withdrawn from Liechtenstein‘s accounts and offshore corporations closed down. “We were aware that this policy change would be a painful process that we would also come to feel on the income side of our country,” Tschuetscher said.
… It was unknown how the union‘s top candidate, Thomas Zwiefelhofer, would fare Sunday, but the head of a trust company is clearly closer to the country‘s financial sector than Tschuetscher, 45, a former tax administrator. In the race for Liechtenstein‘s 25 parliamentary seats, the union is pitted against the Progressive People‘s Party, and the political debate has centred on how to deal with the deficit and on how much taxes would have to be raised.