1. Principle: The Confederation shall maintain its income and expenditure in balance at all times.
2. Rule: The ceiling for total expenditure that is to be approved in the budget is based on the expected income after taking account of the economic situation.
3. Exception: Exceptional financial requirements may justify an appropriate increase in the ceiling in terms of paragraph 2.
4. Sanctions: If the total expenditure in the state financial statements exceeds the ceiling in terms of paragraphs 2 or 3, compensation for this additional expenditure must be made in subsequent years.
5. Implementation: The details are regulated by law.
How it works in principle:
The 1990's were difficult times for the finances of the Confederation. In the space of a few years, billions in deficits led to a sharp increase in debt.
The principle that the Confederation must maintain its receipts and expenditure in balance at all times was already enshrined in the Constitution at that time, but it remained a dead letter, a common phenomenon in politics: there is agreement on the principle, but there are thousands of reasons and individual interests for deviating when it comes to concrete individual cases.
With the fiscal policy experience, there was a growing willingness on the part of the Federal Council and parliament toward the end of the last century to impose fiscal policy restrictions on themselves via concrete and effective expenditure rules in order for the principle to actually be observed: the debt brake requires expenditure to be linked to receipts when budgeting. Not vice versa: first there is an estimate of future receipts. Only then comes expenditure planning.
How it has worked in fact:
By the way, Switzerland has a relatively low tax burden. More details next time.