November 7, 2015 / 1:06 AM / 2 years ago

Swiss canton eyes scrapping German-language requirement for wealthy foreigners

4 Min Read

Cows stand on a meadow with the Swiss town of Zug, Switzerland with the Swiss Alps in the background in this August 2, 2013 file picture.Arnd Wiegmann/Files

ZURICH (Reuters) - Lawmakers in the Swiss canton where fugitive trader Marc Rich took refuge and which Glencore calls home may try to ease the path to permanent residency for some foreigners by scrapping a German language requirement - as long as they've got enough money.

The canton of Zug, with 120,000 residents, now requires that foreigners from countries including Russia, South Africa and the United States learn German if they want to obtain permanent residency.

Some well-heeled foreign residents have balked at this demand, however, leaving Zug worried that they make take their money elsewhere, just as local financial officials expect a 2016 budget deficit of 26.3 million Swiss francs ($26.4 million).

"The canton of Zug is small, and it impacts us when people with significant income and wealth move away," Beat Villiger, an elected member of Zug's government, told Reuters. "And Zug is currently grappling with austerity measures."

Under a plan backed by the local Swiss People's Party and FDP factions, those seeking permanent residency would be allowed to skip German lessons if they earn 1 million francs annually and have taxable assets of 20 million francs.

The less-wealthy would still be put through their paces in the German classroom.

Those in favor of the plan face hurdles, however.

The two factions backing the plan hold just less than half of the 80 seats in the local parliament, so they would need to peel off a few votes from other parties to push it through.

The opposition Greens have vowed to block the move or try to get it overturned if passed.

Others also say that treating the wealthy preferentially may be out of line with Swiss law.

Prospective buyers read sales catalogues containing descriptions of bulls offered at the traditional Stierenmarkt (taurus market) domestic cattle market in the town of Zug, Switzerland in this September 4, 2013 file picture.Arnd Wiegmann/Files

"Making exceptions for wealthy residents hardly seems to conform to constitutional principles," said Alberto Achermann, a professor of migration law at the University of Berne.

Switzerland's decentralized system of government allows individual cantons to decide how to ensure foreigners seeking permanent residency are integrated into the culture.

While some have few formal requirements, Zug requires foreign residents to attend language classes. If the proposal to offer an exception to the wealthy is voted down, the Zug parliament could alternatively scrap its language-learning requirement altogether.

But proponents of the latest move want to keep the German language mandate in general, even as they let a small slice of the wealthy bypass this obligation.

Villiger suggested only about 2 foreigners annually would take advantage of the exception. "For these people, it would be easy for them to simply pick up and settle in another canton without a German requirement," he said.

Zug has pursued a low-tax strategy as it seeks to lure companies and wealthy individuals. Single people with no children who earn 1 million francs face a tax rate of only about 23 percent.

As a result, ex-pats have arrived in droves, with foreigners accounting for 26 percent of Zug's population last year, up from just 15.6 percent in 1990.

Among foreigners who call Zug home are deep-sea oil explorer Transocean, ex-White House chief of staff Bill Daley's hedge fund Argentiere Capital, South African-born Ivan Glasenberg's Glencore and Russian oligarch Viktor Vekselberg.

On Thursday, a Zug government spokesman said lawmakers may debate the German-language exemption within weeks.

Should it become law, however, Zug's Green party has pledged to launch a voter referendum to overturn it.

"Everybody should have the same rights regardless of how fat their wallets are," party secretary Marco Knobel told Reuters.

Editing by Hugh Lawson

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