Fiscal Equalisation
Following the withdrawal of the SOS Communes initiative, the legal texts of the New Intercommunal Equalisation Scheme of the Canton of Vaud (hereinafter NPIV), adopted by the Grand Council, entered into force on 1 January 2025.
The NPIV is a mechanism designed to distribute financial resources among the municipalities in order to reduce financial disparities between them. Like other Swiss cantons, the Canton of Vaud faces economic differences among its municipalities. Some are significantly wealthier than others due to population distribution, fiscal capacity or other economic factors. The NPIV therefore aims to ensure financial solidarity between municipalities with greater resources and those with fewer.
The NPIV is based on four pillars:
Ressource Equalisation
This pillar of the new equalisation scheme aims to reduce fiscal disparities between municipalities arising from differences in financial capacity. The latter is measured primarily by the standardised fiscal income indicator (hereinafter RFS). The resource equalisation mechanism consists of three instruments.
Main solidarity
Municipalities with an RFS per capita above the average contribute an amount corresponding to 80% of the difference from the average.Conversely, municipalities with an RFS per capita below the average receive an amount corresponding to 80% of the difference from the average.
Minimum grant
Municipalities with an RFS per capita below 90% of the average, despite the effects of the main solidarity mechanism, receive a contribution enabling them to reach this minimum threshold.
Conjunctural levies
All municipalities contribute 50% of the revenues from transfer taxes, inheritance and gift taxes, and property gains taxes, as well as 30% of cross-border commuter taxes, into a common fund. After deducting the administrative costs of the equalisation system, the remaining amounts are then distributed to the municipalities in Swiss francs per capita.
Structural needs equalisation
This pillar of the equalisation scheme aims to reduce disparities in municipal burdens caused by structural factors, i.e., factors beyond the control of the municipalities. Municipalities with structural indicators exceeding the cantonal standard are compensated for each excess unit. Payments under this pillar of the equalisation scheme are fully financed by the state as part of the financial redistribution in favour of the municipalities.
Structural needs concern the municipalities’ « productive area » exceeding 120% of the cantonal median, the « elevated population » living above 730 metres, and « weighted pupils » whose residence is more than 2.5 km from their school.
Compensation for special urban costs
This pillar of the equalisation scheme aims to compensate cities for their expenses related to providing services that benefit a population larger than their own. It provides for two types of compensation.
Based on population
This instrument allocates amounts to each municipality according to progressive population brackets. The larger a municipality’s population, the more Swiss francs it receives per capita. This compensation is financed by the municipalities, with distribution calculated per capita.
Based on urban traffic line deficits
This instrument compensates municipalities that contribute to financing the operating deficits of urban traffic lines, covering 60% of these operating deficits.
Cantonal invoices
Cantonal invoices allocate costs between the state and the municipalities for tasks that are either shared or carried out by the state on behalf of the municipalities. Social cohesion falls under the first category, while general police duties fall under the second.
Social Cohesion
The Participation in Social Cohesion (hereinafter PCS) aims to involve municipalities in financing expenditures that support cantonal social cohesion. The social schemes concerned are listed in the Law on the Organisation and Financing of Social Policy (LOF).
Police invoice
The police invoice aims to allocate to the municipalities the costs associated with financing general police duties (hereinafter GPD) carried out by the Cantonal Police on their behalf and/or in their place.