Financing defence in times of war : Switzerland’s conditional power to tax and insights for the European Union

Abstract

In 1915, Switzerland faced – mutatis mutandis – a security crisis (World War I) like the EU in 2025 (the Russo-Ukrainian war). Since both the centre (the Confederation) and the units (the cantons) lacked resources, Switzerland urgently needed to finance defence through a new fiscal capacity at the central level. Through discursive institutionalism, the article shows that Swiss policymaking actors conducted a factual debate: pros and cons of different ways to finance defence were compared, and the central power to tax emerged as the best solution. Crucially, to overcome political divisions, this power was made subject to important conditions (rationale, temporariness, guarantees for cantons’ tax sovereignty, co-participation of revenues, constitutionalization, and democratic approval). In the EU in 2025, the debate on ‘defence borrowing’ was marked by traditional member state divisions between supporters of common European debt and supporters of European fiscal rules, and between loans and grants. From the Swiss debate on ‘defence taxing’ the EU can learn that, in multilevel governance systems, fiscal problems can be solved, and tax taboos can be broken, provided that they are carefully debated – legally, economically and politically – in terms of benefits and disadvantages for the units, for the centre, and for their relationship.