This Law regulates:

A.

The equalization of resources in favour of cantons with low resource potential, financed by the cantons with high resource potential and by the Confederation;

B.

The compensation, by the Confederation, of excessive charges due to geo-topographical or socio-demographic factors;

C.

Intercantonal cooperation with compensation for expenses.

Fiscal Equalization is designed to:

A.

Strengthen the financial autonomy of the cantons;

B.

To reduce the disparities between cantons with regard to financial capacity and the tax burden;

C.

Maintain the fiscal competitiveness of the cantons at national and international level;

D.

Guarantee the cantons a minimum allocation of financial resources;

E.

Compensate for the excessive burdens of the cantons due to geo-topographical or socio-demographic factors;

F.

To guarantee compensation for the fair burden between the cantons.

¹ The resource potential of a canton is the value of its fiscally exploitable resources.

² It is calculated on the basis of:

A.

The taxable income of natural persons under the Federal Direct Tax Act of December 14, 1990 ¹ ;

B.

The wealth of natural persons;

C.

Taxable profits of corporations under the federal direct federal tax law of December 14, 1990.

³ The Federal Council establishes a uniform deductible for income. As far as wealth is concerned, it takes into account only the increase in wealth and with regard to profits, it takes into account the special tax status enjoyed by certain undertakings.

⁴ In collaboration with the cantons, the Federal Council annually calculates the resource potential of each canton per capita, based on the figures of the last three years for which data are available.

⁵ The cantons with a per capita resource potential above the Swiss average are deemed to have high resource potential. The cantons with a per capita resource potential below the Swiss average are known as cantons with low resource potential.

¹ The cantons with high resource potential and the Confederation fund the equalization of resources.

² The total annual share of cantons with high resource potential is at least two-thirds and a maximum of 80 % on the part of the Confederation.

¹ The Federal Assembly sets out, for a period of four years, the basic contribution of the cantons with a high potential for resources and that of the Confederation to the equalization of resources. It takes into account the report of the Federal Council (art. 18) and aims to maintain the tax competitiveness of the cantons at international level.

² The Federal Council adapts, for the second, third and fourth year, the contribution of the cantons to the high potential of resources according to the evolution of their resource potential and that of Confederation as a function of evolution The resource potential of all cantons.

³ Each canton with high resource potential pays, per capita, a uniform percentage of the difference between its own resources and the Swiss average.

¹ The Federal Council adopts each year the allocation of funds for the equalization of resources among the cantons with low resource potential on the basis of their resource potential and the number of inhabitants. The per capita contribution is gradually increasing in line with the increasing difference between the decisive resources of a canton and those of the Swiss average. The ranking of the cantons must not be changed by means of the equalization of resources.

² The funds are paid to the cantons without being subordinated to a specific assignment.

³ The resources that are taken into account for each canton, calculated per capita, should reach at least 85 % of the Swiss average after the addition of the payments of the equalization of resources.

¹ The Confederation compensates for the excessive burdens of the cantons due to geo-topographical factors.

² In particular, the factors causing excessive burdens are:

A.

A higher proportion than the average of higher elevations and productive areas;

B.

Sparse habitat and low population density.

¹ The Confederation compensates for the excessive burdens of the cantons due to socio-demographic factors.

² The factors causing excessive burdens are in particular a higher proportion than the average of the following population groups:

A.

People living in poverty;

B.

Very old people;

C.

Youth facing specific training needs;

D.

Unemployed;

E.

Toxicodependents;

F.

Foreign nationals who require integration assistance.

³ Also taken into account are the additional special charges borne by the centres of major agglomerations.

¹ The Federal Assembly, by a federal decree submitted to the referendum and for a period of four years, lays down the basic contributions for the compensation of excessive charges due to geo-topographical and socio-demographic factors. It takes into account the report of the Federal Council (art. 18).

² The Federal Council adapts the contribution as a function of the increase in the second, third and fourth year.

³ It lays down the criteria for distribution after consultation with the cantons.

⁴ The funds are paid to the cantons without being subordinated to a specific assignment.

¹ The Federal Council retroactively corrects erroneous payments in the area of resource equalization or expense compensation if the error:

A.

Is the result of incorrect data entry, transmission, or processing, and

B.

Generates for one canton at least significant financial consequences.

² The Federal Council corrects errors at the latest when the calculation year's figures for the error are used for the last time in the calculation of the compensatory payments.

³ It defines each year the financial importance within the meaning of para. 1, let. B. To this end, it is based on the average per capita resource potential of Switzerland.

⁴ If the necessary conditions for correction are met, the compensatory payments shall be adjusted as soon as possible. If necessary, adaptation can be spread over several years.

¹ The Federal Assembly may oblige the cantons to cooperate by providing for compensation in the fields referred to in Art. 48 A , para. 1, of the Constitution.

² The obligation is in the form of a declaration of general binding force (art. 14) or an obligation to accede (art. 15).

³ The cantons regulate cooperation in inter-cantonal conventions.

Inter-cantonal cooperation with the compensation of expenses has the following aims:

A.

Ensuring a minimum supply of services to the community;

B.

Performing cantonal tasks collectively and rationally;

C.

Fair compensation for the costs of services benefiting several cantons by ensuring adequate participation of the cantons in decision-making and implementation.

The equalization of benefits accruals to several cantons will take into account in particular the effective use of these benefits, the extent of the right to participate in decisions and the implementation, and the benefits or Considerable inconveniences associated with it and for which the supplier canton benefits because of its situation.

The cantons are developing an inter-cantonal framework agreement on inter-cantonal cooperation with compensation for the charges. In particular, they include:

A.

The principles of inter-cantonal collaboration;

B.

The principles of the compensation of charges;

C.

The competent bodies;

D.

The participation of cantonal parliaments in inter-cantonal cooperation with compensation;

E.

Procedures for membership and denunciation;

F.

The inter-cantonal dispute settlement procedure applicable to all disputes relating to inter-cantonal cooperation with compensation for costs;

G.

The extent to which the principles of inter-cantonal collaboration and the compensation of charges between the canton and its municipalities apply.

¹ The Federal Assembly may, by a federal decree submitted to the referendum, give general binding force:

A.

The intercantonal framework agreement if at least 21 cantons request it;

B.

An intercantonal convention in one of the areas mentioned in Art. 48 A , para. 1, of the Constitution, if at least 18 cantons request it.

² The cantons concerned are consulted before the decision.

³ The cantons which are obliged to accede to a convention under a general compulsory declaration of force have the same rights and obligations as the cantons which have already acceded.

⁴ The declaration of mandatory general force cannot be for a period of more than 25 years.

⁵ Federal orders on the declaration of compulsory general force may provide that the Federal Assembly is entitled to lift the mandatory general force by simple federal order, where, by reason of the circumstances, it is no longer justified, in Particular if:

A.

At least six cantons request it for the intercantonal framework agreement;

B.

At least nine cantons request it for an intercantonal convention.

⁶ The cantons cannot request the lifting of the mandatory declaration of force before five years.

¹ At the request of at least half of the cantons which are parties to an intercantonal convention or whose negotiations have led to a final draft convention, the Federal Assembly may, by a simple federal decree, compel one or more Cantons for accession.

² The cantons concerned are consulted before the decision.

³ The cantons which are obliged to accede to a convention have the same rights and obligations as the other cantons.

⁴ The obligation to join cannot be longer than 25 years.

⁵ The Federal Assembly may, by a simple federal decree, waive the obligation to accede when, due to the circumstances, it is no longer justified, in particular if half of the cantons party to the intercantonal convention request it.

⁶ The cantons cannot request the lifting of the obligation to join before five years.

¹ The cantons establish judicial authorities which act as cantonal or inter-cantonal authorities of the last instance on appeals against decisions of inter-cantonal bodies.

² If a canton infringes an intercantonal convention or a binding decision taken by an intercantonal body, each canton or the inter-cantonal body concerned may refer the matter to the Federal Court when the intercantonal convention on the Settlement of disputes did not lead to an agreement.

If a canton does not implement an intercantonal convention or a binding decision taken by an inter-cantonal body, or if it does not do so within the time limits, the citizens concerned may assert rights based on that Agreement or decision provided that the material provisions contained therein are sufficiently clear and precise.

¹ The Federal Council shall submit to the Federal Assembly every four years a report on the implementation and the effects of this Law.

² The report sets out the extent to which the goals of fiscal equalization have been achieved over the past period and suggests possible measures for the next period.

³ The effects of the inter-cantonal collaboration and the compensation of the charges are set out separately.

¹ The Confederation and the cantons fund a case-compensation fund for cantons with low resource potential in order to facilitate the transition to the new fiscal equalization. The compensation of charges in the context of inter-cantonal cooperation is not taken into account in this context.

² The fund is financed by two-thirds by the Confederation and one third by the cantons.

³ The Federal Assembly sets, by federal decree submitted to the referendum, the amount of the compensation fund for cases of thoroughness. This amount is set for eight years and then decreases by 5 % per year. The participation of each canton is fixed according to the number of its inhabitants. ¹

⁴ The Federal Assembly decides by federal decree submitted to the referendum the lifting, total or partial, of the compensation of the cases of rigor when, on the basis of the report of the Federal Council, it is no longer, or more fully Necessary.

⁵ The Federal Council regulates the allocation of funds between the cantons, according to their resource potential and the results of the financial balance of the transition to the new system of equalization. It consults in advance with the cantons. The compensation of charges in the context of inter-cantonal cooperation is not taken into account in this context.

⁶ A canton loses its entitlement to the benefits of the austerity fund when its resource potential exceeds the Swiss average.

⁷ The funds are paid to the cantons without being subordinated to a specific assignment.

⁸ During the examination to measure whether the minimum staffing objective specified in s. 6, para. 3, has been achieved, the benefits of the case-compensation fund are taken into account.

In areas where the new fiscal equalization provides for financial relief for the benefit of Confederation:

A.

Any request for financial assistance or compensation that is filed between the date of entry into force of this provision and that of the full entry into force of the new fiscal equalization shall be examined under the law in force at the Timing of engagement;

B.

The financial benefits formally guaranteed by the Confederation before the entry into force of the new financial equalization for projects not yet implemented at the time of entry into force of this Law are Provided that if the final count for the completed project is submitted within three years of the coming into force of this Act.

The Federal Council shall issue the implementing provisions. It consults in advance with the cantons.

¹ Any delay in the implementation of a new federal Order under s. 5, para. 1, and 9, para. 1, implies the extension of the Federal Order in force until the following Federal Order takes effect, but the extension period may not exceed two years.

² The Federal Council may adapt the contribution in accordance with Art. 5, para. 2, and 9, para. 2, for the duration of the extension.

Federal Act of 19 June 1959 concerning financial equalization between the cantons ¹ Is repealed.

¹ This Law shall be subject to the referendum.

² It will be published in the Federal Leaf if the people and the cantons accept the decree of 3 October 2003 concerning the reform of the financial equalization and the division of labour between the Confederation and the cantons ¹ .

³ The Federal Council shall fix the date of entry into force, taking into account the state of inter-cantonal cooperation with compensation of the charges.