The system turned Geneva into a city of luxury boutiques and unaffordable housing at a time when the government is asking Swiss people to contribute more to the public finances, the local Socialist Party said before the vote.

“I’m disappointed,” Romain de Sainte Marie, president of the Geneva Socialist Party, said by phone yesterday, adding that he’s still thinking of ways to demand more tax from wealthy foreigners to help bolster the canton’s income.

Geneva has 74,300 millionaires, the greatest concentration of any city, according to Johannesburg-based New World Wealth.

Forfait holders in Geneva paid 169 million francs in taxes in 2012, according to the city’s Chamber of Commerce, Industry and Services. That included 54 million francs raised from inheritance tax and charitable donations.

The system creates 3,000 jobs in the canton, with a total of 22,000 across Switzerland, according to the chamber of commerce.

‘Relief’

“It’s a relief for western Switzerland, where many French emigres, among others, settled to reduce their tax bills and avoid the prying eyes of the French state,” said Mark Summers, head of Switzerland for Charles Russell Speechlys, a law firm with offices in Geneva and Zurich. “Switzerland is facing tough competition from other international low-tax centers.”

The forfait refers to a tax on imputed expenditure that is usually calculated at not less than five times the annual rental value of the individual’s home in Switzerland. Forfait holders don’t have to declare their worldwide income or assets and, unlike other Swiss residents, they don’t pay tax on income from securities’ holdings.

Cantons operating a forfait regime will introduce a minimum taxable income of at least 400,000 francs by 2017, to implement a previous federal reform of the system. While regional authorities retain the right to terminate the forfait within their jurisdictions, Geneva opted to keep the system in a separate local vote today.

“The rules are very clear now and this gives us stability and clarity,” Pierre Maudet, head of the Geneva cantonal government’s economy department, said in a discussion after a press conference at the town hall yesterday. “I’m not convinced the vote on its own will really provoke an influx of forfait holders. There are other significant factors such as schools, law and order and airport access.”