The lower house of parliament voted to reject a proposal by the center-left Social Democrats (SP) to scrap the tax breaks but adopted a government plan to raise the tax most rich foreigners have to pay.
Reuters quoted Swiss Finance Minister Eveline Widmer-Schlumpf as telling the parliament, "With this reform, we want to improve and strengthen the acceptance of the flat-rate tax."
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He also added that the move would mean 80% of those involved to pay more tax after the changes.
Opposition to the favorable 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 23 September 2012.
Meanwhile, seeking support for a national end to the policy, SP parliamentarian Susanne Leutenegger Oberholzer told the parliament, "The population has had enough of this special regime. It is an arbitrary regime, a regime that cannot be verified, a regime that means that only a part of the actual income and wealth of the affected people has to be taxed."
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By GlobalDataThough the parliament had rejected the SP bid to end the special tax system, it backed the Swiss government’s proposal to increase the basis on which taxes are levied to seven times the annual rental value of rich foreigners’ homes from five times now.
The tax increase which still must be approved by the upper house of parliament would be phased in over five years, Reuters added.
