Economic Research

Swiss Issues Regions

Living and Commuting:
Where's the Least Expensive Place to Live?
Disposable Income in Switzerland
May 2011

Economic Research

Publishing details
Published by
Martin Neff, Head Credit Suisse Economic Research
Uetlibergstrasse 231, CH-8070 Zurich
Contact
regionen.economicresearch@credit-suisse.com
Tel. +41 (0)44 334 74 19
Authors
Dr. Sara Carnazzi Weber
Fabian Hrzeler
Thomas Rhl
Jonas Stoll
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Copy Deadline
April 24, 2011
Evaluations for Swiss Municipalities
Fact sheets for selected municipalities are available on request. They contain detailed
evaluations of disposable income and the cost of commuting on the lowest regional
level. Fact sheets can be ordered under the following link:
www.credit-suisse.com/research Swiss Economy Regions
Visit Our Website at
www.credit-suisse.com/research

Disclaimer
Publishing details
This document was prepared by Credit Suisse Economic Research, and does not
constitute the results of any financial analysis by ourselves or others. As a result, the
"Directives on the Independence of Financial Research" issued by the Swiss Bankers
Association do not apply to this document.
This publication is for information purposes only. The views expressed herein are
those of Credit Suisse Economic Research at the time of going to print (we reserve
the right to make amendments).
This publication may be quoted providing the source is indicated.
Copyright 2011 Credit Suisse Group AG and/or companies affiliated to it. All rights
reserved.

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Contents

Summary

1
1.1
1.2

5
5

1.3
1.4
1.5

Concept and Methodology

Factors of Income and Expenditure
Case Types, Regulation Levels, and Regional
Market Structures
Mobility Expenditure
Calculating the Freely Disposable Income
Indicators of Disposable Income

6
7
9
10

2
2.1
2.2

Results
Disposable Income in the Swiss Cantons
Disposable Income in the Swiss Municipalities

12
12
15

Selected Components of Financial

Residential Attractiveness
Tax Burden
Housing Costs
Regional Differences in Commuting Costs and
Tax Deductions
Health Insurance Premiums
Premium Reductions for Compulsory Health
Insurance

3.1
3.2
3.3
3.4
3.5

Appendix

17
17
18
19
21
22

25

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Summary

Living costs are not the same everywhere. Swiss households can optimize their budgets by
moving to a different location. Substantial savings can be achieved, sometimes by moving only
within a short distance. Besides the well-known differences in the tax burden, other factors determine the financial attractiveness of a municipality for living. Different real estate prices, health
insurance premiums, family allowances and other factors in sum lead to significant differences
between localities. A comprehensive indicator of the financial attractiveness of a municipality for
living is the freely disposable income, which denotes the amount of money that remains available to a household after the deduction of all mandatory charges and fixed costs.
The analysis of the financial residential attractiveness of Swiss municipalities and cantons was
first conducted in 2006, and updated in 2008. Our latest calculation takes account of commuting costs. Depending on the distance to work and the chosen mode of transport, this expenditure can have a significant impact on your household budget. However, mandatory charges and
housing costs are still the major factors influencing the financial residential attractiveness.
In previous calculations, Appenzell Innerrhoden took the top position in the cantonal ranking for
financial residential attractiveness. This year it has been displaced by Uri. Since 2009, middleclass households in Uri have benefited from a considerable reduction in the tax burden. At the
same time, housing costs are comparatively low. On the RDI indicator scale, which expresses
the freely disposable income for broadly defined middle-class households, the mainly urban cantons of Geneva, Basel-Stadt, Vaud, Basel-Landschaft and Zurich continue to post values below
the average. High rents and real estate prices, particularly in the cantons of Western Switzerland as well as above-average mandatory charges make living in the centers an expensive proposition. Living in peripheral urban areas can be much cheaper despite higher commuting costs,
as the RDI indicator at municipality level shows. Even moving from a city center to a suburban
area can sometimes generate considerable savings. Agglomerations in the cantons of Thurgau,
Schaffhausen, Schwyz, Solothurn, Lucerne and Aargau are particularly attractive to households
that require a large living space, but seek to avoid an excessively long commute to work.
A detailed analysis of the various cost factors highlights a number of surprising findings. The tax
burden is evidently still skewed along the east/west axis. The fierce tax competition in Central
Switzerland and the Zurich area has clearly not yet reached the cantons in the Western half of
the country. In the Lake Geneva area it is therefore differences in housing costs that have the
greatest impact. Municipalities in Fribourg in the immediate vicinity of the major center of Lausanne benefit in this respect. They are financially attractive places to live in relative terms, and
for several years they have reported significant immigration. Cantonal reductions in health insurance premiums accentuate the differences in the net charge on households from one part of
the country to another. Viewed overall, these reductions tend to be larger in areas where premiums are already low. The highly topical tax-deductibility of commuting costs is handled very differently from one part of the country to another. In some cantons deductions can amount to
tens of thousands of francs, while in others they are restricted to the minimum actual public
transportation costs.
Our objective in analyzing the financial attractiveness of different residential locations is to make
regional differences as transparent as possible. This will enable households to make rational,
fact-based decisions about where to live, avoiding false conclusions. With this in mind, we have
prepared fact sheets with detailed evaluations at municipal level. Information on orders can be
found in the publishing details.

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Concept and Methodology

The amount that remains to a household after the deduction of mandatory charges and fixed
costs for free consumption depends on household characteristics and the location. Transfer
revenues, mandatory charges, costs for housing and ancillary costs are different depending on
the household size, living conditions, labor income and assets. This year, for the first time, fixed
costs include mobility costs, i.e. the costs of commuting to Switzerland's main labor market centers. The concept of disposable income together with suitable aggregated indicators allow us to
handle this diversity and to assess the relative financial attractiveness of different cantons or
municipalities.
1.1
How much money is left at
the end of the month for
consumption?

Factors of Income and Expenditure

The financial attractiveness of a region for living depends on a number of regionally different
factors related to income and expenditures. Beside taxes imposed on the federal, cantonal and
municipal level, numerous other components of the budget should be considered (Figure 1).
Discretionary household spending can be divided into different categories, depending on its
significance and its time pattern. For example, whether to buy or rent a home is basically a discretionary decision, but forms a basic need. Moreover, it has a long-term characteristic, since
reversing it involves significant transaction costs. Housing costs and associated expenditures
can thus be interpreted as a household's fixed costs. Other significant expenditure, for example
on insurance, also has long-term implications, but cannot be regarded as existential in a narrow
sense.
Commuting costs vary widely in their impact on household budgets. Depending on the distance
between home and work as well as on the mode of transport, the daily costs for commuting can
amount to considerable numbers. Since they result from a household's living and working situation and are essential for livelihood, they can also be regarded as part of location-dependent expenditures. Other costs related to mobility arising from private travels or shopping trips however, are mainly a result of discretionary decisions.
Figure 1
Expenditures of Private Households
Examples depending on types of consumption decisions and commitment horizon

Statutory Obligation

Discretionary Expenditure
Essential expenditure

- Income tax
- Wealth tax
- Social insurance contributions
- Compulsory health
insurance

Short-term - Cost of food

commitment - Spending on clothing

Discretionary consumption
decision
- Various consumer spending
- Spending on entertainment

- Housing costs
- Insurance
Long-term - Spending determined by place of
- Media and telecommunications
commitment residence
subscriptions
(ancillary costs, charges)
Mobility

- Commuting costs (travel passes, - Supplementary mobility costs

kilometer costs)
(e.g. leisure and shopping trips)

Source: Credit Suisse Economic Research

Considering all locationdependent spending

In order to determine the freely disposable income, we consider a household's mandatory expenditure as well as long-term expenditure and commuting costs the so-called fixed costs
(colored blue in figure 1). Spending that is subject to short-term consumption decisions is not
included, however since it is neither related to the decision on where to live nor is it binding.

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The average Swiss household has a freely disposable

annual income of CHF
57'690

The budget of an average household covers a variety of income sources and expenditure items
(Figure 2). The bulk of the average Swiss household's gross income, around 76.4%, is earned
income. Investment and rental income accounts for 3.8% of gross income, while transfer income and pension/social insurance payments add up to 18.1%. This proportion has decreased
by 2.4% since the last calculation in 2006, the base year, after having consistently risen for
many years due to the aging population. The reason lies in a disproportionate rise in incomes
during this period.
Figure 2
Budget of an Average Swiss Household, 2008
In CHF per year; average household size: 2.2 people

100'000

Income
Transfer
income

Expenditure
Taxes

Compulsory health insurance

Social insurance contributions

Investment and
rental income

2nd pillar contribution

80'000

40'000

20'000

Disposable income

60'000

Earned income

Commuting

Housing
costs

Ancillary costs

Freely disposable
income

120'000

Energy and
electricity

0
Source: Federal Statistical Office, Credit Suisse Economic Research

Health insurance premiums

and social insurance payments are a heavy burden

On the expenditure side, 29% of gross income goes in mandatory charges, 11.7% almost
half on income and wealth taxes. Contributions to social insurance and pension funds (2nd
pillar) together with premiums for compulsory health insurance gulp another 15.1% of gross
income. This figure has slightly decreased since the last calculation in the base year 2006, although premiums have increased. Once again, the rising income has compensated for the premium increase. Disposable income denotes the sum available to households after the deduction
of mandatory charges. It ammounted to CHF 77'585 in 2008, CHF 5'575 more than in 2006.
Fixed costs account for 18.2% of gross income, and can be divided into housing costs
(11.9%), ancillary costs (2%), electricity and energy costs (1.3%) and commuting costs
(3.0%). Deducting fixed costs leaves the average Swiss household with a freely disposable income of CHF 57'690 (52.8% of gross income) for further consumption and saving.
1.2

Case types: the individual

viewpoint

Case Types, Regulation Levels, and Regional Market Structures

Depending on earned income, assets, household characteristics and living conditions, income
and expenditure can be significantly different. Figure 3 shows the household characteristics that
are taken into account, which in combination yield around 60'000 case types. Depending on
the specific assumptions about commuting distances this number will further increase. In order
to take account of the differences between households, we have calculated the freely disposable income for all these case types in the various territorial units.

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Figure 3
Case Types for the Analysis of Disposable Income
Characteristic
Household types

Number of
Specification
types
4

Single

Married, no children

Married, two children

Retired couple

Rental apartment, 60 m
Fitted out to medium standard

Rental apartment, 100 m

Fitted out to medium standard

Rental apartment, 150 m

Fitted out to medium standard

Condominium
Fitted out to medium standard

Condominium
Fitted out to high standard

Single-family house
Fitted out to medium standard

Housing Types

Earned income

101

Ranging from CHF 0 to 500'000

Wealth

21

Ranging from CHF 0 to 5'000'000

Commuting

No commuting

Commuting to the nearest large or medium-sized

center, public transportation

Single-family house
Fitted out to high standard

Commuting to the nearest large or medium-sized

center, private motor vehicle

Source: Credit Suisse Economic Research

Regional differences in the

income and expenditure
components of households
in Switzerland

A large part of the prices underlying household expenditure are subject to substantial regional
differences owing to the Swiss system of financial federalism or to local differences in market
structures. They are the reason for the differences in disposable income at the regional level.
This forms the basis of the financial criteria in the competition among Swiss regions, and it is at
the core of the present analysis. Figure 4 illustrates the various income and expenditure factors,
the corresponding regulation level and the scope of the market structure, respectively. More detailed information on data sources can be found in the Appendix.
Figure 4
Regional Differences in Types of Income and Expenditure
By regulation level or the regional scope of the market structure

Federation
Transfer income (FA, PR)
Income tax

Cantons

Municipaities

Other

Imputed rental value for owner-occupiers

Wealth tax

2nd pillar contributions

Social insurance contributions (AHV, IV,

EO, ALV, NBU)

Compulsory health insurance premiums

Premium regions

Housing costs

Ancillary costs/charges

Energy/electricity

Mobility costs (commuting)

Tax deductions for commuting costs

depending on distance from the

workplace and transportation
mode
depending on distance from the
workplace and transportation
mode

Legend: FA: family allowances; PR: premium reductions; AHV: Federal Old Age and Survivors' Insurance; IV: Federal Disability Insurance; EO: Income replacement scheme; ALV: Unemployment insurance; NBU: Non-occupational accident insurance
Source: Credit Suisse Economic Research

1.3

Mobility Expenditure

For the first time since this study was launched in 2006, in this year's issue the costs of personal mobility are considered and deducted from the freely disposable income for each of the
specific case types. The costs which are relevant for the indicator include the real costs that
arise because of commuting from home to work and back. These "commuting costs" depend on
the distance between home and work as well as on the mode of transportation. They can give
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rise to significant differences in the freely disposable income. Non-monetary costs, such as the
time spent for commuting, are hardly quantified in Swiss francs and hence are not considered in
our calculation. Taking account of mobility costs enhances the explanatory power of the concept
of financial residential attractiveness, as the benefits from living in a remote, low-cost location
are often "bought" at the cost of long-distance, high-cost commuting.
Due to the large number of cases that result from the many possible combinations, the explanatory power would be moderate, such that we limit our calculations to the major commuting journey, for each municipality: from home to the nearest major or medium-sized center. Centers are
defined in accordance with the municipal typology of the Swiss Federal Statistical Office. The
displayed numbers represent costs of commuting both by public transportation and private motor
vehicles. The costs are calculated on an annual basis, assuming an average of 193.4 working
days.
Public transportation costs are based on the prices of the minimum annual season ticket (travel
pass) provided by the regional travel systems for the relevant zones. Where journeys are not
covered by at least one regional travel system, the costs equal the price of an SBB point-topoint season ticket or a GA (Generalabonnement). In the case "Married, no children" it should
be considered that a so-called "partner GA" is available at reduced price.
Calculating the full costs of
commuting by private motor vehicle

The costs of commuting by private motor vehicle are based on the cumulated annual distance of
the commuting journey. Appropriate vehicle types are then assigned to the various case types.
They are taken from technical data on the vehicles most sold in Switzerland in 2010 (Figure 5).
The fixed costs are divided in terms of whether they relate to commuting or other vehicle usage,
assuming non-commuting motoring of 6'619 km a year (adjusted for the type "Married, no children"). The variable costs per kilometer can be charged directly.
Figure 5
Commuting by Private Motor Vehicle: Cost Overview

Fixed costs
per year

Variable costs

Cost factor

Calculation basis

Annual depreciation
Return on capital
Road tax
Third-party liability insurance

10% of list price (straight-line)

0.375% of half the list price (approximate)
Dependent on the canton of residence and vehicle
parameters
CHF 600

Partial accidental damage insurance

1.2% of the list price

Garaging costs

CHF 1'500

Incidental expenses

CHF 240

Vehicle care
Depreciation

CHF 150
2% of the list price per 10'000 km

Fuel costs

Dependent on fuel consumption with gasoline at CHF

1.68 per liter (correct at the time of calculation)
Costs for tires
4 x CHF 250 per 30'000 km
Repairs, servicing, exhaust maintenance CHF 680 per 10'000 km
Source: Touring Club Schweiz, Credit Suisse Economic Research

Hypothetical Example 1: Mr. Monod, living in Geneva

Mr. Monod recently graduated from the University of Geneva and is now working in
Lausanne. He is single and lives in a 60-square-meter rental apartment. Mr. Monod earns an
income of CHF 75'000, and he has inherited assets of CHF 50'000. After the deduction of
all mandatory charges, his disposable income amounts to CHF 47'900. After considering
housing costs, ancillary and electricity costs, Mr. Monod is left with CHF 25'700. In addition,
he pays CHF 2'385 for his travel pass from Geneva to his place of work in Lausanne.
By moving to Lausanne, Mr. Monod could save 30 minutes each way as well as the annual
costs for the travel pass. His freely disposable income in Lausanne would total CHF 29'300,
which corresponds to an increase of 14%.

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1.4

Calculating the Freely Disposable Income

The first step in determining the freely disposable income is to calculate a household's gross income, which equals the sum of earned and pension income, investment income, and transfer
income from public redistribution systems (Figure 6). What remains after the deduction of mandatory charges constitutes the disposable income. Households are free to spend this amount as
they think fit. However, their fixed living costs have not yet been taken into account.
Figure 6
Calculating the Freely Disposable Income
By type of residence and main income source

Gainfully-employed tenants

Gainfully-employed homeowners

Earned income, gross

Earned income, gross

Pensioners
Pension income (AHV, pension)

Transfer income (PR, FA)

+ Transfer income (PR, FA)

+ Transfer income (PR, FA)

Capital income (interest, dividends)

+ Capital income (interest, dividends)

+ Capital income (interest, dividends)

Gross income

= Gross income

= Gross income

Income tax (basis: gross income, mobility deductions) - Income tax (basis: gross income,
imputed rental value, mortgage interest, mobility
deductions)
Wealth tax
- Wealth tax

2nd pillar contributions

- 2nd pillar contributions

Social insurance contributions (AHV, IV, ALV, EO

etc.)
Compulsory health insurance premiums

- Social insurance contributions (AHV, IV, ALV, EO

etc.)
- Compulsory health insurance premiums

- Compulsory health insurance premiums

Disposable Income

= Disposable Income

= Disposable Income

Net rental costs

- Housing costs (depending on the type of residence)

Ancillary costs, costs of water,

sewage, waste disposal
Energy and electricity costs

- Owner-occupation costs (mortgage interest,

capital repayments for any 2nd mortgage, maintenance)
- Ancillary costs, costs of water,
sewage, waste disposal
- Energy and electricity costs

Commuting costs

- Commuting costs

Freely Disposable income

= Freely Disposable income

- Income tax (basis dependent on the type of residence)

- Wealth tax

- Ancillary costs, costs of water,

sewage, waste disposal
- Energy and electricity costs
= Freely Disposable income

Source: Credit Suisse Economic Research

Regional cost differences that play a role in the competition among residential locations, are not
restricted to mandatory charges, but also apply to costs of existential consumption. The freely
disposable income is calculated by subtracting housing costs (rental or owner-occupation), ancillary costs, costs of water, sewage and waste disposal, electricity and energy charges as well
as commuting costs. Hence, the freely disposable income represents the amount remaining to
the household for consumption or saving.
Differentiated assessment
depending on type of residence and income source

Depending on the type of residence and a household's major source of income, some factors
must be assessed differently. Owner-occupiers, for example, enjoy an additional tax privilege in
that their mortgage interest is deductible when calculating their taxable income though this is
increased by an imputed rental value. In addition, property ownership besides incurring mortgage interest, repayment and maintenance costs reduces the owner's income-producing assets. All cantons permit deductions to be made from taxable income in respect of expenditure
on work-related travel. This system differs from canton to canton, but it reduces the tax burden
of commuters all over.
In the case of pensioners, whose main income stems from pension payments instead of earned
income, mandatory charges are significantly lower, since they pay no social insurance contributions. Furthermore, as pensioners by definition are no longer gainfully employed, they incur
no commuting costs.
Based on this approach, we have calculated the freely disposable income for the considered
case types in the 2'706 Swiss municipalities. Besides the individual cases the development of
the freely disposable income as a function of earned income offers valuable insights. Figure 7
displays this development of the freely disposable income for Riehen (Basel-Stadt) in compari-

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son to three other municipalities. It takes account of the costs of commuting to Basel from all
four locations, assuming the use of a midsize family car for the daily journey. Annual commuting
costs, which are independent of income, add up to an amount between CHF 1'958 (Riehen)
and CHF 5'619 (Hofstetten-Flh). Due to tax progression, the shape of the curve representing
the freely disposable income flattens as earned income rises. The intersection of the curves indicates the income level at which one municipality becomes financially more attractive than another.
Figure 7
Freely Disposable Income in Riehen (BS), 2011
In comparison with adjacent localities. Family with 2 children, mid-range single-family house, assets of CHF 300'000
Costs of commuting to Basel by a midsize family car

300'000

Freely disposable income

250'000
200'000
150'000
100'000
Riehen (BS)
Hofstetten-Flh (SO)
Oberwil (BL)
Kaiseraugst (AG)

50'000
0
100'000

150'000

200'000

250'000 300'000
Earned income

350'000

400'000

450'000

Source: Credit Suisse Economic Research

As figure 7 shows, a family who lives in the municipality of Kaiseraugst in the canton of Aargau
has the highest freely disposable income. For the selected household type, Hofstetten-Flh is
the second most attractive place to live up to an earned income of CHF 360'000. From there
on, due to higher taxes Hofstetten-Flh is overtaken by Riehen. With an earned income of CHF
205'000 and more, residents in Oberwil have the lowest freely disposable income.
1.5

Indicators of Disposable Income

Due to the large number of individual cases it is rather difficult to obtain an overview of the differences in the freely disposable income. We have thus calculated indicators that allow general
conclusions on the financial attractiveness of the various territorial units. From the shape of the
curve illustrating the freely disposable income in figure 7 two fundamental statements emerge:

RDI (Regional Disposable Income) indicator: The area under the curve represents the
aggregate freely disposable income of all households in a specific territorial unit. For the
range of earned incomes considered we use the central 80% interval of the Swiss income distribution. This implies that the bulk of households in a location are taken into
account, such that the statement is valid for the broad middle class.
Marginal income: The slope of the curve on the same interval of the income distribution
indicates how much of an additional franc earned is freely disposable for consumption. In
the hypothetical case of zero taxes and zero charges, marginal income would be 100%.

The calculation of the freely disposable income for the above described case types has been
conducted on the level of individual municipalities. The cantonal values represent the aggregate
values of the municipalities, weighted by the number of population. The figures for the various
combinations of types of residence and household were weighted with their relative share on the
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total of Swiss households. Since commuting distances and costs within a canton vary widely
from one municipality to another, commuting costs are not included in our regional aggregation.

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Results

Unlike traditional comparisons of the attractiveness of residential locations, the analysis of regional differences in the freely disposable income takes account of new aspects. A simple comparison of tax burdens ignores the fact that high real estate prices in low-tax regions cancel a
large part of tax savings. Furthermore, regional differences relating to other types of expenditure, such as for the health insurance premiums, for example by far have larger effects than
generally supposed. Given that a large part of the labor force commutes to the Swiss labor market centers, the cost benefits of living in agglomerations close to the centers are accentuated.
2.1

Disposable Income in the Swiss Cantons

The RDI indicator for the cantons varies between a maximum value of slightly higher than 2 and
a minimum of -4. It represents a synthetic indicator which for Switzerland is equal to the average value of 0. Positive values therefore indicate a freely disposable income higher than the
Swiss average, negative values stand for income levels below the average.
Figure 8
Freely Disposable Income in the Swiss Cantons (RDI Indicator), 2011
Without commuting costs; synthetic indicator, CH = 0

3
UR
2
1

GL
AI OW TG AR
SH SG NW
GR SZ SO LU AG JU
VS FR

TI

ZG BE

0
NE
-1

ZH BL
VD BS

-2
-3
-4

GE

Source: Credit Suisse Economic Research

The least expensive place

to live is Uri

Figure 8 shows the values of the RDI indicator for all Swiss cantons. The canton of Uri has the
highest value, displacing Appenzell Innerrhoden from the top position that it held in the 2006
and 2008 rankings. Households in Uri benefit from low taxes and moderate health insurance
premiums. Though housing costs in the canton of Uri may not be the lowest in Switzerland, they
are significantly below the national average. Slightly behind, the canton of Glarus is in second
place in terms of the financial attractiveness for households of the broad middle class, followed
by Appenzell Innerrhoden, Obwalden, Thurgau, Appenzell Ausserrhoden and Schaffhausen, all
of them with values significantly above the average. They are at the top of a broad class of cantons above the average attractiveness, benefitting from different advantages.

Living in the centers is expensive

High housing costs particularly affect the budgets of middle class households in the centers.
Households in the canton of Geneva are left with the lowest freely disposable income by far.
The cantons of Basel-Stadt, Vaud and Zurich are also below the average. Thanks to agglomerations and rural areas, the latter two are closer to the national average than the purely urban
canton of Geneva. However, Basel-Land and Neuchtel, which constitute less urban cantons,
are also below the average. Zug, which according to the locational quality indicator of Credit

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Suisse is the most attractive canton since years and benefits from high international immigration.1 In terms of the RDI indicator however, Zug is barely above the average.
Attractiveness must be
broad-based to achieve top
rankings

As the examples of Zug and Jura show, low taxes or low housing costs do not suffice for a canton to be financially attractive. Figure 9 illustrates the motives behind the cantonal RDI values
and displays the changes vis--vis the positions in 2008. On the horizontal axis, the mandatory
charges that are imposed on households of the middle class, are depicted as standardized sum.
The sum of the fixed costs of a location is displayed on the vertical axis. Though the households
in Zug pay the lowest mandatory charges by far, high fixed costs significantly affect their budgets. This is the reason for the average position of this Central Switzerland's canton in the RDI
ranking.

Canton of Jura: low housing

costs, high taxes

On the other side, we find the canton of Jura, with the lowest fixed costs by far. Low rents and
real estate prices at first glance may predict a high value of financial residential attractiveness.
However, as soon as mandatory charges are taken into account, in particular the tax burden,
the picture modifies substantially. In sum, in the cantonal ranking of the financial attractiveness,
Jura is in position 15.
Figure 9
Change in Expenditure Components in the Cantons, 20082011
Mandatory charges: income and wealth taxes, social insurance contributions, compulsory health insurance
Fixed costs: housing costs, ancillary costs, charges for water, sewage and waste disposal; standardized values, CH = 0
Fixed costs

Tax advantages make up for

high fixed costs

Double disadvantages

GE

Positioning 2008
Positioning 2011

ZG
ZH
SZ

BS

CH-average

NW
GR

LU

OW
AI

UR

GL

SG
TG

VD

BL

Mandatory charges

TI
AG
SO

VS FR

BE

NE

AR SH
JU

Combined advantages

Asymmetric
positioning

Source: Credit Suisse Economic Research

Uri on Top

Since the last calculation of the freely disposable income in 2008 there have been several
changes in the rankings. They are illustrated in figure 10, and are highlighted by figure 9. The
most distinctive change relates to the canton of Uri, which has moved from 11th place in 2008
to the top position in this year's ranking. The reason for this rise lies in the amendment of the
tax law by 2009, which was based on the change to a flat-rate tax model that created considerable tax reductions for the broad middle class. Other cantons having risen by at least three positions are St. Gallen and Lucerne, which have also reduced their mandatory charges. Besides
Uri, also the canton of Basel-Stadt denotes substantial reductions in its mandatory charges.
However, to date it had no effect on its ranking.
While there have not been any changes regarding the cantons at the bottom of the ranking, a
few ones have become less attractive in relative terms (Figure 10). The most distinctive descents apply to the cantons of Schwyz, Solothurn and Jura, all of which have lost five positions.
In all these cantons, the mandatory charges have risen in relative terms. This does not necessarily imply that health insurance premiums or tax burden have increased in this time period.
Their decline may also be explained by the fact that other cantons in terms of these factors

See: Swiss Issues Regions: Der Wirtschaftsraum Zug Struktur und Perspektiven, Credit Suisse Economic Research, March 2011 (available in German only).

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have become more financially attractive since 2008. The canton of Zug has lost one rank.
Unlike in other cantons, this results mainly from the significant increase in fixed costs.
Figure 10
Freely Disposable Income (RDI Indicator): Changes 20082011
No commuting costs; rankings of the 26 cantons. Negative differences indicate losses of ranks, positive differences indicate gains of ranks

UR GL AI OW TG AR SH SG NW GR SZ SO LU AG JU VS FR

TI ZG BE NE ZH BL VD BS GE

Rank RDI indicator 2011

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

Rank RDI indicator 2008

11

13

12

17

14

10

15

16

19

18

20

21

22

23

24

25

26

Difference 2008-2011

10

-2

-2

-1

-1

-5

-5

-5

-1

-1

-1

Source: Credit Suisse Economic Research

How much of an additional

franc earned is left for consumption?

Marginal income reflects the proportion of an additional franc earned that is available to the
household for consumption. This value expresses the rise in disposable income if earned income
increases. Under the assumption that additional effort generally yields higher earned income,
the indicator provides information about the financial incentives to earn higher income. The
higher the share of additional income being taxed, the lower is the financial incentive to exert
additional effort, due to the lower financial benefit.
Figure 11
Marginal Income in the Swiss Cantons, 2011
Freely disposable share of an additional franc of earned income (average); in %

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
ZG SZ UR NWOW ZH GL GR AI AG LU AR BS SG SH TG CH BL TI VD SO VS FR BE GE JU NE
Source: Credit Suisse Economic Research

Marginal income is determined exclusively by the tax burden of a location. Unlike housing costs
or health insurance premiums, for example, it is completely unaffected by markets. The value
can therefore be regulated by politics. Accordingly, a region has the opportunity to design the
fiscal system such that it provides attractive conditions for the target group of potential future
residents. Due to tax incentives those regions where the marginal income is high are likely to attract people with rising earned income.
In Zug residents get 19
centimes more of each
additional franc than in
Neuchtel

Figure 11 shows the marginal income for the Swiss cantons. For the analysis of marginal incomes the cantons are the appropriate territorial unit, since they exert the greatest influence on
tax levels and progression. In the cantons of Zug, Schwyz and Uri, which head the rankings,
over 70% of each additional franc earned is available for consumption. The mid-range cantons
show values between 60 and 70%, while the marginal income in Neuchtel, Jura and Geneva is
well below the Swiss average of 63%. The fiscal systems of these cantons are characterized by
both high tax rates and high progression. As a consequence, disposable income in these cantons rises more slowly with increasing earned income compared to the Swiss average. Resi-

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dents of Zug keep 74 centimes of each additional franc they earn, while in Neuchtel they have
to make do with 55 centimes.
2.2

Disposable Income in the Swiss Municipalities

As the lowest administrative level of the Swiss state system, the municipalities are the appropriate unit for the analysis of disposable income: Most components of financial residential attractiveness are either affected by locally administered prices, or they represent goods in welldefined local markets. Given the wide competencies of the municipalities within the Swiss (financial) federalism, beside the federation and the cantons they constitute the final authority that
takes decisions affecting the financial attractiveness of residential locations.
Figure 12
Freely Disposable Income in the Swiss Municipalities (RDI Indicator), 2011
Synthetic indicator, CH = 0; including the costs of commuting to the nearest center

-5.2 -2.0
-2.0 -1.0
-1.0 -0.3
-0.3 0.0
0.0 0.3
0.3 0.6
0.6 1.0
1.0 1.5
1.5 2.0
2.0 3.0
Cantons

25

50 km

Source: Credit Suisse Economic Research, Geostat

The RDI values for the Swiss municipalities, including the costs of commuting to the nearest
center, are shown in figure 12. In the major centers Zurich, Basel, Berne, Lausanne and Geneva, including the adjacent municipalities, disposable income is lowest. The metropolitan regions, usually characterized by higher real estate prices, tax burden and health insurance premiums, are mostly unable to compete in terms of financial attractiveness with smaller municipalities in conurbations and in peripheral areas. A considerable number of municipalities in agglomerations are attractive to people who commute to a center for work. They may increase their
freely disposable income by carefully selecting their residential location without having to put
up with an excessively long journey to work. This effect is attenuated when commuting costs
are taken into account, as the example of the canton of Vaud clearly shows but is far from
compensating the difference between centers and agglomerations.
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Living in the canton of Fribourg may pay off

The significance of cantonal borders is impressively highlighted at various locations. In the Lake
Zug area the municipalities in Schwyz have the most attractive RDI values, mainly because of
the relatively low real estate prices. The situation in the Lake Geneva region is crystal-clear:
Though commuting costs are taken into account, municipalities in the canton of Fribourg
which are close to the centers of Lausanne, Vevey and Montreux in terms of transportation links
are distinctly more attractive than the adjacent municipalities in the canton of Vaud. The same
pattern can be observed for municipalities in Fribourg that are close to the city of Berne. Thanks
to health insurance premiums and real estate prices which are lower on a regional comparison,
the canton of Fribourg enjoys clear competitive advantages.

Second homes depress the

freely disposable income in
tourist areas

Apart from center regions, internationally well-known tourist areas such as the Upper Engadine,
Davos, Grindelwald, Zermatt, Bagnes/Verbier and Gstaad-Saanen have RDI values that are
distinctly below the average. The high demand for second homes and the subsequent price
pressure have a significant impact on the household budgets of the resident population. As expected, the highest RDI values are found in the inner alpine municipalities of Central Switzerland
and in municipalities in the remote valleys of Graubnden, which are not known as classic tourist
destinations. Poor accessibility and harsh living conditions make them less attractive for living
and keep real estate prices low. North-eastern Switzerland appears generally attractive: Thanks
to low taxes and low health insurance premiums, real estate prices below the Swiss average and
a high concentration of centers, the RDI values of the region are above the average.
Hypothetical Example 2: Family Urner, living in Hergiswil, Canton of Nidwalden
Family Urner lives in Hergiswil, canton of Nidwalden, in a single-family house fitted out to a
medium standard that was bought with an 80% mortgage. Mr. and Ms. Urner have two children, savings of CHF 300'000, and joint earned income of CHF 150'000. The family allowance and investment income bring their gross household income to around CHF 155'200.
After the deduction of all mandatory charges (tax, pension and social insurance contributions,
compulsory health insurance premiums) their disposable income is CHF 112'400. Housing,
ancillary and electricity costs plus the costs of commuting to work in Lucerne by car bring
their freely disposable income to CHF 39'800.
Moving to Altdorf, where the Urners are originally from, would increase their freely disposable
income to CHF 69'700 despite the higher costs of commuting, a difference of CHF 30'000.
On the other hand, their journey to work would take 35 minutes, as against 10 minutes from
Hergiswil.

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Selected Components of Financial Residential Attractiveness

Regional differences in the financial residential attractiveness on one hand result from mandatory charges prescribed at the cantonal and the local level. On the other hand, well-defined local
markets, such as the real estate market, also have a significant impact on household costs.
Given a particular place of work, the choice of the place of residence also significantly affects
the time and money spent on commuting. While financial residential attractiveness depends on
the total of all costs incurred, there also appear interesting regional differences in the individual
components.
3.1

Tax Burden

Taxes on income and wealth are one of the largest items of household expenditure, accounting
on average for 11.7% of gross income. The tax burden on natural persons is therefore one of
the major factors underlying the financial residential attractiveness. Switzerland's federal structure gives individual cantons and municipalities relatively far-reaching tax-raising competencies.
The legally-binding ordinance on the application of the Tax Harmonization Act, in force since
2001, has resulted in a standardized approach to the principles of taxation across all cantons,
but tax rates and tax allowances are still being determined by the cantons. Furthermore, municipalities are empowered to determine the tax thresholds applying to their residents.
Figure 13
Tax Burden on Natural Persons 2010
Synthetic index, CH = 100

45 65
65 75

Scha f fh aus en

75 85

Bas el

85 100
100 115

Fr auen fel d

115 125

Li esta l

125 135

St.Ga llen
Aa ra u

Delmo nt

Zr ich

Her is a u

Cantons

Ap penz ell
Sol o th ur n
Zug
Gla ru s

Lu zer n

Neuch tel

Schw yz
Ber n

Sar nen

Stans
Altd o rf

Ch ur

Fr ibo ur g

La us a nne

Bel linz o na
Sio n
Genve

25

50 km

Source: Braingroup, Credit Suisse Economic Research, Geostat

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Local authorities thus enjoy substantial freedom of action in determining their residential attractiveness. Figure 13 displays the index of the relative tax burden on natural persons in Swiss
municipalities. The indicator considers taxes on income and wealth at the federal, cantonal and
municipal level for various categories of income and wealth. The lower the value, the lower the
tax burden and vice versa. The map highlights the fact that mainly the eastern part of the
country in particular Central Switzerland is actively engaged in the tax competition for individual persons. In contrast, cantons in Western Switzerland as well as the Basel region and the
cantons of Berne and Solothurn have tax burdens above the Swiss average. On average, residents in the canton of Neuchtel pay the highest taxes in Switzerland.

Western Switzerland untouched by tax competition

3.2

Housing Costs

Besides taxes, housing costs are one of the largest expenditure items for most Swiss households. Spending on rent or mortgage interest accounted for an average of 11.9% of the average household budget in 2008. Thereby, housing costs constitute a major factor in particular for
households with low or medium budgets, whereas spending by relatively high-income households is mostly dominated by the tax burden.
Figure 14
Average Annual Rent for a Four-Room Apartment Fitted out to a Medium Standard
No ancillary costs; in CHF, CH average: CHF 24'380; 1st quarter of 2011

14'600 16'500

Scha f fh aus en

16'500 18'500
18'500 20'500

Bas el
Fr auen fel d

20'500 22'500
22'500 24'380

Li esta l

24'380 26'500

St.Ga llen
Aa ra u

Delmo nt

Zr ich

Her is a u

26'500 28'500

Ap penz ell

28'500 30'500
Sol o th ur n

30'500 32'500
32'500 37'000

Zug
Gla ru s

Lu zer n

Neuch tel

Schw yz
Ber n

Sar nen

Stans
Altd o rf

Ch ur

Fr ibo ur g

La us a nne

Bel linz o na
Sio n
Genve

25

50 km

Source: West & Partner, Credit Suisse Economic Research, Geostat

High housing costs in the

centers and tourist regions

Due to differences in regional supply and demand structures, it is almost impossible to speak of
a homogeneous national real estate market. Instead, there are several regionally distinct markets for rental and owner-occupied property. Prices thus differ widely from one residential region to another. Our calculations of disposable income consider prices for rental apartments as
well as single-family houses and condominiums in various categories. Figure 14 depicts rental
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prices in the Swiss municipalities, excluding ancillary costs, for a four-room apartment fitted out
to a medium standard. Regional disparities regarding the prices of owner-occupied properties
are basically similar to those in rental prices. The highest rents are paid in the centers, the conurbations, and the tourist regions. Also in the low-tax cantons of Central Switzerland, rental
costs are partly above the average. In many rural municipalities however, rental costs for comparable apartments are below the national average. The most and least expensive municipalities
differ by a factor of about two and a half. The cantons of Jura and Neuchtel are particularly
cheap places to live.
3.3

Regional Differences in Commuting Costs and Tax Deductions

Differences in municipality-specific commuting costs are largely due to the distance traveled
from home to work and the transportation mode selected. Expenditure on travel by private car
can be as much as four times the cost of using public transportation. But cantonal and regional
factors can also have significant effects on commuting costs. Most public transportation commuting services are organized as regional travel systems, whose price structures vary in some
cases very widely. The use of private motor vehicles is subject to differences in cantonal fiscal
policies in the form of tax deductions and road taxes.
Figure15
Cost of Commuting by Public Transportation to the Nearest Large or Medium-Sized
Center
Annual travel pass costs in CHF, single case type
Schaffhausen

3'001 - 3'300

Aarau

2'701 - 3'000

Basel

Olten

Wil (SG)
Baden

2'401 - 2'700

Winterthur

Zrich

2'101 - 2'400
St. Gallen

1'801 - 2'100
1'501 - 1'800
1'201 - 1'500

Biel/Bienne

Zug

Neuchtel

901 - 1'200

Solothurn

601 - 900
378 - 600

Bern

Chur

Luzern
Thun

La Chaux-de-Fonds

Fribourg

Lausanne
Vevey

Locarno

Montreux

Genve

25

50 km

Bellinzona
Lugano

Sion

Source: SBB, Credit Suisse Economic Research, Geostat

Public-transportation travel
passes from the A-Welle to
the Z-Pass

In Switzerland, there are 19 regional travel systems. Swiss Federal Railways (SBB) is one of the
members in 17 of them. The regional travel systems offer tickets and travel passes valid for a
wide variety of periods, most of them entitling the holder to the free use of the transportation
services available in the relevant zone. In most cases, the price structure is based on a system
of zones except the North-West Switzerland travel system (TNW), which covers the catchment area of the city of Basel at the low standard rate of CHF 700 per year. Combinations of
various regional travel systems are also available. The well-known Z-Pass provides seamless
links between the regions of Zurich, Zug-Schwyz, Aargau and North-Eastern Switzerland. Excluded from the benefits of a regional travel system are the canton of Valais, most parts of the
cantons of Uri, Glarus and Graubnden (though there are local travel systems in Davos and the
Upper Engadine, and travel passes for the Chur city network) and parts of the canton of Vaud.

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In these regions, SBB point-to-point travel passes are the cheapest option for commuters.
Figure15 shows the annual commuting costs to the nearest large or medium-sized center for all
Swiss municipalities.
Tax deductions sugar
commuting

In Switzerland, the bulk of the costs of commuting to work can be deducted from taxable income. This "indirect subsidy" for commuting is politically contentious, as it creates incentives to
live further away from one's place of work. In extreme cases, it leads to tax deductions of over
CHF 30'000. Proponents argue that deductibility is justified since commuting is rarely a matter
of choice. Most cantons allow the deduction of the actual costs of a 2nd-class public transportation travel pass. In cases where the use of a private motor vehicle is reasonable or appropriate, its operating costs can be claimed in accordance with the standard cantonal rate per kilometer. There is no standard national definition regarding the conditions applying to the use of a
private motor vehicle, but they basically include cases such as illness or frailty on the part of the
taxpayer, significant time savings vis--vis public transportation, and the remoteness of the
nearest station or stop. The cantons of Uri, Nidwalden and Schaffhausen are exceptions.
Schaffhausen allows commuters who use their own motor vehicles to deduct the cost of a firstclass rather than a second-class public transportation travel pass from their taxable income.
In the canton of Nidwalden the whole distance traveled by private motor vehicle multiplied by the
standard rate per kilometer is deductible without restriction. The most generous canton is Uri,
where deductions from taxable income are allowed at the rate of CHF 0.70 per kilometer for
the first 20'000 kilometers traveled, and at CHF 0.40 thereafter. This applies regardless of the
transportation mode used, and indeed even to pedestrians.

Graubnden heads the

road tax ranking

Road taxes also vary widely from one canton to another. Figure 16 shows a cantonal comparison of tax rates for a typical Swiss private car, assuming an engine size of 1'800 cm3, power
equal to 161 bhp, and a weight of 1'400 kg. The alpine cantons of Graubnden and Valais are
respectively the most and least expensive for this type of car, where Graubnden charges
roughly two-and-a-half times as much as Valais. The cantons also vary in the role played by the
vehicle parameters weight, cubic capacity, power in the calculation of road taxes. The cantons of Neuchtel and Schwyz employ a combination of the first two in their calculations, while
Ticino and Vaud use the second and third. More and more cantons are introducing lower tax
rates for vehicles with lower emissions.
Figure 16
Road Tax on a Cantonal Comparison 2011
Annual tax for a private motor vehicle in CHF, Legend: C = cubic capacity, W = weight, P = power
C
500

W W&P
P
C

400

W W&P
C

C W&C
W&C
C

300

C
C

C
C

200

100

0
GR BL BE JU

TI GE FR BS AR VD SO GL LU CH SG ZH OW SZ NE AI NW ZG AG TG UR SH VS

Source: Cantonal tax laws, Credit Suisse Economic Research

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3.4

Health Insurance Premiums

The rising proportion of the older age groups in the population as a whole, increasing average
life expectancy, and the development of modern but expensive medical treatments have resulted
in soaring healthcare costs in recent years. As a result, health insurance premiums have become significantly more prominent in the household budgets. Between 2000 and 2010, average monthly premiums for adults over 25 grew by an annual average of 5.2%, while the average annual rise in the national consumer price index was only 0.9%.
Regional differences in
premiums based on cost

Insurers in Switzerland are allowed to adjust their premiums on a cantonal and regional basis to
their costs. In 2001, the federal government was instructed to unify the intracantonal premium
regions, which were previously determined individually by the insurers. Cantons where insurers
are faced with variable cost distribution were divided into two or three areas in which different
premiums were allowed to be charged for the same insured benefits (Figure 17). The price variance between the most and least expensive areas within a given canton is thereby restricted. In
1993, in an effort to confine competition for clients with below-average healthcare costs, a federal resolution was passed introducing the balancing of risk among the insurers. Health insurers
with an above-average proportion of young clients, men in particular, are required to make balancing payments to insurers with higher-cost members. Regional differences in health insurance
premiums therefore no longer depend on the age and gender structure of the insurers' client
base. Regardless of disease patterns, they mainly reflect differences in the intensity of healthcare provision, which is partly determined by different doctor/patient ratios. From 2012 on, the
risk-balancing process will therefore also take account of the number of days spent in hospitals
and nursing homes by each health insurer's clients. Another reason for the regional premium
differences arises from the health insurers' policies on building up reserves, by which the cantons are affected to varying extents.

Centers, Western Switzerland and Ticino are most

expensive

Figure 17 shows median annual basic insurance premiums for persons aged over 25 in the 42
Swiss premium regions. Premiums tend to be higher than elsewhere in the urban regions,
Western Switzerland and Ticino. They vary from approximately CHF 2'460 in the canton of Appenzell Innerrhoden to CHF 4'780 in the canton of Geneva, which corresponds to a factor of
almost two. The 21 more expensive premium regions account for two thirds of this difference.
The largest intracantonal discrepancy equals some CHF 900 per year between premium region
1 and premium region 3 in the canton of Berne. The overall picture is similar with regard to
premium distributions for children (under 18) and young adults (between 18 and 25).
Hypothetical Example 3: Mr. and Mrs. Rossi, living in Lugano, Canton of Ticino
Recently married, Mr. and Mrs. Rossi live in a single-family house in Lugano, canton of
Ticino, fitted out to a high standard and bought with an 80% mortgage. They both work in
Lugano, and they have joint earned income of CHF 250'000 and assets of CHF 600'000.
Their gross income amounts to CHF 254'800. After the deduction of all mandatory charges,
their disposable income is CHF 153'800. Housing, ancillary and electricity costs bring the
couple's freely disposable income in Lugano to CHF 67'300.
Moving to a similar property in nearby Caslano, also in Ticino, would increase their freely disposable income to CHF 75'800. The costs of commuting using two separate cars are considered in these figures, but the distance of 10 km would take each of them 12 minutes a
day to complete.

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Figure 17
Health Insurance Premiums for Compulsory Basic Cover in the Swiss Premium Regions, 2011
Annual median premium available from the health insurers authorized in 2011 in CHF; adults; deductible = CHF 1'000; BASE insurance model, no accident cover; Swiss
median: CHF 3'272

2'400 2'700
2'700 3'000

SH 1
SH 2

BS

3'000 3'272

TG

SO

3'272 3'600

BL 1

3'600 3'900

BL 2

BL 2

3'900 4'200

JU

4'200 4'500

ZH 3
AG

ZH 3
LU 3

LU 2

SZ

LU 1

NE
BE 1

FR 2
FR 1

SG 3

ZH 2

AR
AI

ZG

BE 1

VD 2

SG 2
SG 2

ZH 1

SO

4'500 4'800

ZH 2

SG 2

GL

NW
OW

BE 2

GR 1

OW

GR 2

UR

VD 2

GR 3
FR 2

BE 3

VD 1
TI 2
VD 2

GR 1
VS 2

GE

TI 1

VS 1

25

50 km

Source: Swiss Federal Office of Public Health, Credit Suisse Economic Research, Geostat

3.5
Significant regional differences in premium reductions granted

Premium Reductions for Compulsory Health Insurance

To assist persons of modest means, the cantons grant reductions on health insurance premiums with financial support from the federal government. These depend mainly on income,
wealth and the type of household and like the premiums themselves vary widely. Distinctions
are also drawn between children, young adults and adults. Figure 18 shows net premiums after
reduction for a single adult with annual gross income of CHF 40'000 and no assets. In half of
the premium regions a person with this income receives no reduction, while a 37% reduction
applies in the canton of Obwalden. It is worth noting that in the considered example, the interregional premium variance increases when reductions apply. There has been a particularly sharp
rise in the difference between the extreme values. In premium region 1 of the canton of Vaud
the net premium is CHF 4'380, which corresponds two-and-a-half times the costs in the canton
of Obwalden.

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Figure 18
Premium Costs for Single Adults
Gross income: CHF 40'000, no assets; annual median premium available from the health insurers authorized in 2011; deductible = CHF 1'000; BASE insurance model, no accident cover; in CHF

5'000
4'500

Net premium

Premium reduction

4'000
3'500
3'000
2'500
2'000
1'500
1'000
500
OW
ZG
GR 1
GR 3
GR 2
FR 2
AI
GL
ZH 3
BE 3
NW
FR 1
ZH 2
AR
BE 2
UR
LU 3
VS 2
SG 3
SO
SZ
LU 2
SG 2
ZH 1
BE 1
AG
SH 2
TG
LU 1
VS 1
SG 1
SH 1
BL 2
JU
BL 1
NE
TI 2
BS
TI 1
VD 2
GE
VD 1

Source: Cantonal agencies responsible for premium reductions, Credit Suisse Economic Research

Figure 19 shows that the regional differences in premiums are also larger for other types of
households when reductions are taken into account. The highest premium for a family of four is
more than four times the lowest. Most of the reductions apply to premiums that are already relatively low. Figure 19 allows to draw conclusions about cantonal policies on premium reductions.
The cantons of Basel-Landschaft, Ticino and Vaud draw no distinction when granting reductions
based on which of the two premium regions a person lives in. A household in Laufen (premium
region BL 2), for example, benefits from the same reduction as one in Liestal (premium region
BL 1), even though the annual gross premium in Laufen is about CHF 700 lower. In the canton
of Graubnden, in contrast, support contributions vary on a regional basis, such that net premiums in all three premium regions are about equal while gross premiums differ. The policies of
the remaining cantons come somewhere between these two extremes. However, regional premium reductions differ widely as a function of assets as well as income. In the canton of St.
Gallen, single adults with taxable assets of CHF 100'000 receive no premium reductions, independent of their income situation. In the canton of Nidwalden, however, households with no net
income receive support up to taxable assets of about CHF 1.2 million.
Hypothetical example 4: Mr. and Mrs. Zrcher, living in Richterswil, Canton of Zurich
Mr. and Mrs. Zrcher are retired. They live in a 150-square-meter rental apartment in Richterswil, canton of Zurich. They receive pensions and AHV benefits of CHF 80'000 in respect
of their former gainful employment. Their assets amount to CHF 300'000. The gross income
of Mr. and Ms. Zrcher is equal to CHF 87'500. After the deduction of income and wealth
taxes and compulsory health insurance premiums, their disposable income is CHF 72'100.
Housing, ancillary and electricity costs bring their freely disposable income down to CHF
44'000. Moving from Richterswil to a similar property in a neighboring municipality in the canton of Schwyz to Freienbach or Einsiedeln, for example would increase the couple's freely
disposable income to CHF 46'900 or CHF 48'600 respectively. This would be equivalent to
increases of 6.5% and 10%, respectively.

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Figure 19
Premiums for Families with Two Children
Gross income: CHF 85'000, no assets; annual median premium available from the health insurers authorized in 2011; deductible: adults = CHF 1'000 (no accident cover), children = CHF 300 (with accident cover); BASE insurance model; in CHF

12'000
11'000

Net premium

Premium reduction

10'000
9'000
8'000
7'000
6'000
5'000
4'000
3'000
2'000
1'000
ZG
OW
GR 1
GR 3
GR 2
AI
NW
AR
UR
BL 2
AG
GL
LU 3
BL 1
LU 2
SZ
SH 2
SO
SH 1
TG
ZH 3
LU 1
SG 3
VS 2
SG 2
ZH 2
SG 1
FR 2
VS 1
TI 2
ZH 1
VD 2
BE 3
TI 1
FR 1
NE
BS
GE
JU
BE 2
VD 1
BE 1

Source: Cantonal agencies responsible for premium reductions, Credit Suisse Economic Research

Premium reductions increase inequality in premiums

As already indicated, figure 19 shows that households in regions where premiums are already
low tend to receive more support than those in cantons that are more expensive in this respect.
This fact is not restricted to these two examples: Rather it applies across virtually the entire relevant spectrum of income and asset distribution. This means that on average, less financially
strong households in high-cost premium regions bear a high proportion of the health insurance
premiums than similar households in parts of Switzerland where healthcare costs are lower.
Cantonal premium-reduction systems, however, take account of other factors besides the costs
caused by the population. Income and asset distribution in the cantons is also an important factor in setting the income and asset thresholds below which reductions are granted. Payment
levels are also affected by the state of the canton's finances. Finally, the cantons can also utilize
reductions as a means of making transfer payments from financially stronger to financially
weaker households.
RDI Fact Sheets for the Swiss Municipalities
Since it would not be practicable to present the results for the around 2'700 Swiss municipalities in this study, we have prepared fact sheets for all municipalities with more than 500
inhabitants, which compare their financial attractiveness as residential locations with major
adjacent municipalities, and provide further information on commuting costs. The fact sheet
for the municipality of Dietikon (ZH) is shown on pages 26 and 27.
We kindly provide you with the fact sheet of your residential location or any reference municipality. The order form can be found at the following link:
www.credit-suisse.com/research Swiss Economy Regions

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Appendix

Overview of Income and Expenditure Factors Utilized

Abbreviation, regional delimitation, data sources
Regional
delimitation
CH

Year Source

Cant.

Mun.

()

Transfer income
Premium reductions

PR

()

Family allowances

FA

2011 Responsible cantonal agencies

2011 Federal Social Insurance Office (BSV)

Mandatory charges
Income-tax rates

Wealth-tax rates

2010 Braingroup

2010/ Credit Suisse Economic Research,

2011 cantonal tax offices

Imputed rental value for owner-occupiers

2010 Braingroup

Federal Old Age and Survivors' Insurance

AHV
(AHV)

2011 Federal Social Insurance Office (BSV)

Federal Disability Insurance

IV

2011 Federal Social Insurance Office (BSV)

Income Replacement Scheme (EO)

EO

2011 Federal Social Insurance Office (BSV)

Unemployment Insurance

UI

2011 Federal Social Insurance Office (BSV)

NOA

2008 Federal Social Insurance Office (BSV)

2011 Federal Social Insurance Office (BSV)

Non-occupational accident insurance

Occupational pensions
Compulsory health insurance
premiums
(by premium region)

()

()

2011 Federal Office of Public Health (FOPH)

Transaction prices for residential real

estate

2010 West & Partner

Apartment rental prices

2011 West & Partner

Electricity prices

2010 Federal Electricity Commission

2011 Price watchdog

Fixed costs

sewage, water and waste-disposal

charges
Ancillary and energy costs

2008 Swiss Federal Statistical Office (BFS)

Commuting costs: public transportation

travel passes

2011 SBB, Credit Suisse Economic Research

Commuting costs: private car

2011 TCS, Credit Suisse Economic Research

Tax deductions for commuting costs

2011

Cantonal tax laws,

Credit Suisse Economic Research

Source: Credit Suisse Economic Research

Swiss Issues Regions

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Economic Research

Disposable Income in Swiss Municipalities

DIETIKON (ZH)
Map of Municipality

Regional Overview

Municipality Facts
Canton

ZH

District

Dietikon

Population (2009)

20'655

Population growth (1999-2009)

Mandatory charges
low

1.2%

Employed persons (2008)

high

Fixed costs

Swiss average

low

13'503

high

The fixed costs comprise: living costs, ancillary expenses, charges for water, sewers and waste collection, cost of commuting to nearest center. The mandatory charges comprise: Income and wealth taxes, social security
contributions, mandatory health insurance. Both are standardized figures taking the Swiss average as their zero point.

Information about Commuting

Commute to

Transportation

Commuter

Time

Integrated fare network /

mode

no. (2000)

each way

travel pass

Married couple

Family

1 commuter

2 commuters

1 commuter

ZVV-AG 3 Zones

3'933

10'462

4'075

1'053

2'106

1'053

ZVV 3 Zones

4'994

12'810

5'182

1'035

2'070

1'035

in minutes
Baden (AG)

Private vehicle

104

16

Baden (AG)

Public transp.

104

Zrich (ZH)

Private vehicle

3'617

21

Zrich (ZH)

Public transp.

3'617

12

Cost per year in CHF

Single person

Information on commuting relates to routes to the nearest relevant center. The starting point in each case is the center of the corresponding municipality. Travel costs associated with vehicles vary according to household type and
are based on the following vehicle types: Single person = compact car, married couple = higher-price-bracket station wagon + compact car, family: medium-price-bracket station wagon.

Disposable Income for Reference Households

Single person

Married couple (no children)

Family (2 children)

In employment

1 person

2 persons

1 person

Retired

Income

75'000

250'000

150'000

80'000

50'000

600'000

300'000

300'000

Rented apartment 60m 2

High-quality SFH

Medium-quality SFH

Rented apartment 100m 2

Assets
Living situation
Transp. mode

CHF

CHF

Baden (AG)

Private vehicle

32'400

43%

Baden (AG)

Public transp.

35'300

47%

Zrich (ZH)

Private vehicle

31'400

Zrich (ZH)

Public transp.

35'300
36'200

Commute to

No commuting

Retired couple

CHF

CHF

59'900

24%

49'900

33%

68'300

27%

53'000

35%

42%

57'600

23%

48'800

33%

47%

68'300

27%

53'000

35%

48%

69'900

28%

53'200

35%

44'500

56%

"Disposable income" relates to the amount that remains at a household's disposal based on income from employment, assets, occupational pensions and any transfer payments and after deduction of all mandatory charges
(income and wealth taxes, social security contributions, pension contributions, health insurance premiums) and fixed costs (living costs, ancillary expenses, electricity costs). The inclusion of commuting results in transportation
costs, part of which are tax-deductible. SFH = single-family house. % = relative share of gross income.

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Economic Research

DIETIKON (ZH)
Comparison of Disposable Income
30 selected reference

Cost of commuting to nearest center

Commuting costs excluded

municipalities in the region

RDI Indicator

Single*

Couple*

Family*

Single*

Couple*

Family*

Rtd Couple*

Dietikon (ZH)

-0.49

33'900

64'100

51'500

36'200

69'900

53'200

44'500

Bergdietikon (AG)

-0.39

33'300

74'900

56'500

36'000

80'700

59'200

45'200

Weiningen (ZH)

-0.30

34'500

67'800

53'300

37'500

75'200

56'500

46'300

Oetwil an der Limmat (ZH)

-0.70

34'400

55'500

45'000

36'600

60'900

46'700

44'500

Spreitenbach (AG)

0.23

34'600

83'700

63'000

36'300

88'200

64'000

46'100

Rudolfstetten-Friedlisberg (AG)

-0.10

33'400

75'600

57'500

36'600

82'500

60'700

46'300

Killwangen (AG)

0.07

34'900

76'200

58'100

36'300

80'000

58'800

46'000

Widen (AG)

-0.13

34'500

70'200

53'800

37'100

76'500

55'800

47'000

Geroldswil (ZH)

-0.41

35'500

59'400

47'400

37'600

64'800

49'700

46'300

Unterengstringen (ZH)

-0.93

34'100

48'300

40'900

36'300

53'800

42'500

44'000

Httikon (ZH)

0.11

35'500

74'800

57'500

37'600

79'000

59'700

46'700

Schlieren (ZH)

-0.41

34'500

63'800

51'200

36'700

69'200

53'500

45'300

Wrenlos (AG)

0.00

34'500

78'500

58'700

36'000

82'500

60'300

45'500

Berikon (AG)

0.11

34'900

78'500

58'900

37'800

84'700

61'100

47'800

Birmensdorf (ZH)

-0.78

33'500

55'600

45'600

35'900

61'400

48'100

43'800

Urdorf (ZH)

-0.96

33'600

49'000

41'900

36'300

55'600

44'000

44'500

Neuenhof (AG)

0.20

34'100

86'500

63'600

35'100

88'500

64'600

44'700

Eggenwil (AG)

0.17

35'000

80'000

60'000

37'400

85'800

62'500

47'800

Dnikon (ZH)

0.25

34'900

82'100

62'200

37'000

87'400

64'400

45'600

Bellikon (AG)

0.04

34'500

80'600

60'700

36'600

85'900

62'200

46'200

Otelfingen (ZH)

-0.04

35'600

72'900

56'200

37'500

77'600

58'200

46'400

Oberengstringen (ZH)

-0.73

33'400

59'200

48'200

35'800

65'200

50'700

43'700

Bremgarten (AG)

0.26

34'400

85'200

63'800

37'100

91'700

66'600

47'300

Oberwil-Lieli (AG)

-0.10

34'000

72'900

55'100

36'700

79'500

58'000

45'900

Zufikon (AG)

0.50

35'300

91'700

66'800

38'100

97'800

69'700

48'700

Regensdorf (ZH)

-0.62

33'800

59'400

47'900

36'600

66'200

50'800

44'900

Aesch bei Birmensdorf (ZH)

-1.53

33'300

30'600

29'700

35'900

37'000

31'800

43'200

Uitikon (ZH)

-1.36

34'700

37'700

32'900

36'500

41'300

34'700

44'000

Knten (AG)

0.59

34'800

94'300

69'200

36'900

98'700

71'300

47'300

Baden (AG)

0.12

35'000

79'700

59'500

35'700

81'300

59'500

44'800

Zrich (ZH)

-2.26

32'600

19'300

21'200

33'500

21'500

22'100

39'800

The RDI (Regional Disposable Income) indicator expresses the disposable income for a wide range of households. For Switzerland it is set at 0.
Cost of commuting: average cost of public transport and private vehicle. * The definition of reference households corresponds to that on the first page. Bold = nearest relevant center of employment. Only municipalities with more
than 500 inhabitants are taken into account. The number of municipalities corresponds to the number in 2008 (2'706).

Information
Contact

Further Information

Credit Suisse Economic Research

"Living and Commuting: Where's the Least Expensive Place to Live? Disposable Income in Switzerland"

Regional Analysis

www.credit-suisse.com/research Swiss Economy Regions Publications

Email: regionen.economicresearch@credit-suisse.com Sources

Tel.: +41 44 334 74 19

Details of sources are contained in the above-mentioned study.

Credit Suisse Group AG

Credit Suisse AG is one of the world's leading financial services providers. As an integrated bank, Credit Suisse offers clients combined expertise in the areas
of private banking, investment banking, and asset management.
Disclaimer
This document was prepared by Credit Suisse Economic Research, and does not constitute the results of any financial analysis by ourselves or others. As a
result, the "Directives on the Independence of Financial Research" issued by the Swiss Bankers Association do not apply to this document. This publication is
for information purposes only. The views expressed herein are those of Credit Suisse Economic Research at the time of going to print (we reserve the right to
make amendments).
This publication may be quoted providing the source is indicated. Copyright 2011 Credit Suisse Group AG and/or its affiliated companies.

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