Liechtenstein - Politics, government, and taxation



Liechtenstein is a constitutional monarchy governed by a hereditary prince. According to the constitution of 1921, legislative power is vested in the unicameral parliament (Landtag), consisting of 25 members elected by universal suffrage for 4-year terms. The Landtag members are elected in the 2 multi-seat constituencies (electoral districts): the Upper (or highland, formerly called Vaduz) and the Lower (or lowland, formerly called Schellenberg), by proportional representation . Although very small in size, Liechtenstein is further divided into 11 administrative units or communes (Gemeinden): Balzers, Eschen, Gamprin, Mauren, Planken, Ruggell, Schaan, Schellenberg, Triesen, Triesenberg, and Vaduz.

Elections for the Landtag held on 9 and 11 February 2001, gave 49.9 percent of the vote and 13 Land-tag seats to the Progressive Citizens' Party in Liechtenstein (FBPL), a conservative group. The then ruling conservative Patriotic Union (VU) received 41.1 percent and 11 seats, and its representative, chief of government Mario Frick, resigned accordingly. An environmentalist group, Free List (FL), remained third with 8.8 percent of the vote, or just 1 seat in the House. In February 1997, the Free List (FL) had achieved the best score in its history with 11.6 percent of the vote, corresponding to 2 seats in the Landtag. Like the VU, in 2001 the FL lost some votes in favor of the FBPL and was not able to retain its former positions in the lowland constituency. Participation in the election reached 86.7 percent, just a bit less than in 1997, when 86.9 percent of the electorate voted.

The hereditary prince and the elected government constitute the executive branch of government. The ruling prince, Hans Adam II, assumed his executive powers in 1984, and his heir apparent is his son, Prince Alois von und zu Liechtenstein. On the motion of the parliament, the prince appoints a prime minister and 4 councilors to form the cabinet. Prior to the February 2001 elections, Mario Frick of the VU was the prime minister and chief of government since 15 December 1993. Following the 2001 elections, Otmar Hasler was selected as the prime minister.

Liechtenstein is a member of many international organizations such as the United Nations (it maintains a permanent mission to the UN in New York), the Council of Europe, the Organization on Security and Cooperation in Europe, the European Bank for Reconstruction and Development, the EFTA, the World Trade Organization, the International Atomic Energy Agency, and the World Intellectual Property Organization, among others.

With a maximum tax rate of 18 percent, Liechtenstein has one of the most liberal tax regimes in the world, and its banks, generally considered as members of the Swiss banking family, enjoy a stable reputation for their solidity and privacy policies. The country has a stable foreign trade balance surplus and zero foreign debt . But in 2000, it faced its biggest domestic and foreign political crisis since World War II as the affluent principality was shaken by allegations that it was an international money laundering center and by the subsequent arrests of several leading public figures ordered by a special prosecutor from Austria.

A conflict between Prince Hans Adam II and the government over the extent of the royal family's powers, rein-vigorated by the money laundering allegations in 2000, almost brought about a constitutional crisis later that year. The prince and the cabinet had been at odds for quite a long time over a pending project for a constitutional reform. The prince had claimed he wanted to modernize the way Liechtenstein is run and give more power to the people, while the then prime minister Mario Frick and other critics held the opposite was true and claimed the envisaged reforms would concentrate more power in the prince's hands. The prince threatened to muster the 1,500 signatures required by law to bring about a referendum on the issue if he did not get what he wanted, and said if he was to lose the constitutional debate he would leave for Austria, the seat of his family before World War II. That might raise serious questions about how the principality would be governed in the future.

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