The House of Representatives has given short shrift to a planned law, allowing Swiss banks to hand over data of suspected tax dodgers to the United States. However, the parliamentary procedure will continue.
A majority of opponents of the law argued the law violated Swiss sovereignty, did neither provide enough information about possible consequences nor assurances from the US to protect bank employees.
The rightwing Swiss People, the centre-right Radical Party and most centre-left Social Democrats voted against the bill and demanded the government take a decision without parliament.
Suppporters of the law, the centrist Christian Democrats, the Conservative Democrats, the Liberal Greens as well as the centre-left Greens, argued it was better to accept the bill to minimise the risk of an escalation of the tax row with the US.
The house voted with 126 to 67 against the bill to deal a blow to the cabinet and Finance Minister Eveline Widmer-Schlumpf.
Banking secrecy
She had unsuccessfully tried to convince the parliamentarians that only a draft law gave Swiss banks the option of taking part in a unilateral offer by the US justice department to settle their cases without violating Swiss banking secrecy rules.
After the vote she announced the cabinet will continue to defend Swiss law against attacks, but it is not willing to tolerate breaches of the Swiss law.
The bill now goes back to the other parliamentary chamber, the Senate, which had approved the draft law last week.
If the Senate follows the house later this week the bill has officially failed.
More to follow