Swiss voters on Sunday firmly rejected a measure proposed by the Liberal Green Party to replace the country’s value-added tax (VAT) with a carbon tax.

Official results reported by local media showed that 92% of voters rejected the initiative, with an overall turnout of around 42% of eligible voters.

The tax, which was also supported by the Green Party of Switzerland and environmental groups, would have applied to fossil fuel sources such as gasoline and heating oil, encouraging consumers to use more renewable forms of energy.

But Switzerland’s parliament, government, cantons and largest companies opposed the proposal, warning that it would drastically cut the 22 billion francs currently raised annually by the VAT.

Proponents of the measure said its resounding defeat showed that the country’s economic worries coupled with the strong Swiss franc were dissuading voters from backing tax reform.

Switzerland already has a carbon tax for energy companies that don’t participate in its domestic emissions trading scheme.

Last year, the government threatened to raise the tax by 40% in 2016 – to 84 francs from 60 currently – if companies failed to meet reduction targets of 22 percent below 1990 levels before the end of 2014.

A cut of between 22% and 24% would have equated to the tax rising to 72 francs/tonne next year, while a reduction in excess of 24% would have left the current tax level as is.

By Mike Szabo – mike@carbon-pulse.com