Rüschlikon holds on to Glencore bonus

The Swiss village's decision to give itself a tax cut is facing criticism. By Tony Paterson
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The Independent Online

Residents in the Swiss village of Rüschlikon are celebrating an unexpectedly generous yet controversial Christmas tax break, thanks to Ivan Glasenberg, the billionaire head of the commodities giant Glencore, who lives there.

The village council voted this week to cut locally levied income tax from 79 to 72 per cent after finding the municipal coffers had amassed a Sfr60m (£41m) surplus, amounting to about £8,300 for each of the community's 5,200 residents.

The substantial windfall was both a product of Mr Glasenberg's wealth and the Swiss tax system which obliges taxpayers to contribute to both their local authorities and central government.

The $11bn floatation of Glencore in May this year turned Mr Glasenberg into a multi-billionaire.

Rüschlikon, on the northern shore of Lake Zurich, does not get as much sun as its super rich opposite number – the so-called "Gold coast" on the southern shore, which is home to countless millionaires and billionaires. Yet Rüschlikon is home to several Glencore executives.

Mayor Bernhard Elsener said after the tax break was approved by the village council that it was "directly linked" to Glencore's floatation.

However he rejected demands from left-wing and church campaigners that the town should donate Sfr1m of the windfall to compensate communities in developing countries which they claim have been adversely affected by Glencore's operations.

The commodities giant has been criticised by campaigners for transactions carried out in countries such as Zambia and Colombia. Critics argue that it is guilty of encouraging mining companies to plunder poor countries that are rich in natural resources but with weak governments.

"The people of Rüschlikon prefer to demonstrate solidarity in private rather than via the municipality," Mr Elsener said.

The village council approved the tax break after exercising the Swiss direct democracy system, which dictates that decisions are first taken directly by resident voters on the spot. Mr Elsener said the tax break vote attracted an unusually good turnout of some 424 voters.

Protesters distributed leaflets claiming that Glencore's business practices were "unfair and not sustainable". However their demands were voted down by a large majority.

Mr Glasenberg's 15.8 per cent stake in Glencore was worth about $9bn on flotation. The South African born executive was granted Swiss citizenship last December and is rated as the country's eighth wealthiest person with a fortune worth between Sfr6bn and Sfr7bn.

Both Glencore and Mr Glasenberg refused to comment on Rüschlikon's decision to cut taxes. But the company rejected charges that its business practices exploited Third World countries. "Glencore applies strict standards at its operations around the world," a spokesman insisted.

Swiss observers have pointed out that Rüschlikon has a vested interest in retaining its wealthy residents and doing as little as possible to offend them. Mr Glasenberg has lived in the village in the Canton of Zurich since 1994. Yet if he wanted to retain more of his fortune, Mr Glasenberg could simply move to Canton Schwyz, which starts just a few kilometres along the shores of the lake and boasts the lowest taxes for the rich in Switzerland.