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Ticketed for an exit

Sodexho affair could bring an end to stravenky tax breaks

By Michael Heitmann
Staff Writer, The Prague Post
January 30th, 2008 issue

Photo illustration by KURT VINION/The Prague Post
Stravenky, employer-sponsored vouchers popular with workers, may soon disappear.
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They’re a common sight in restaurants. Brightly colored pieces of paper, completely dissimilar to bank notes, handed to waiters in payment. These are stravenky, the meal tickets that have floated through the country as a sort of secondary currency since communist days.
Thanks to tax deductions, the vouchers remain in wide circulation: 65 percent of all companies provided their employees with meal tickets last year. This year, 52 percent of managers will give such tickets to all their employees, according to a recent survey.
But the time of these vouchers may be coming to an end. Already, the center-right government of Prime Minister Mirek Topolánek of the Civic Democrats (ODS) tried to give the tickets their last rites as part of 2007’s public-finance reform package. Amid public outcry, the government was forced to order a hasty retreat.
Now efforts to cancel the tax deductions granted for meal tickets are back and stronger than ever. Even politicians who previously intervened to save the stravenky last year, like Deputies Miloš Melčák and Michal Pohanka (ODS), have changed their minds about the program.
This reversal is widely attributed to an exposé on the public broadcasting station Czech Television which aired Jan. 14. The report revealed that Sodexho Pass, one of the largest meal ticket providers, had given 100,000 euros ($146,000/2.6 million Kč) to the PR agency No Comment to help ensure the tickets’ continued existence, shortly before debates in the Chamber of Deputies that spared the stravenky tax breaks. No Comment has close ties to leading ODS representatives, Czech TV added.
The exposé increases the likelihood that a motion to end the stravenky benefits will pass when it comes up for debate in the next months. While the motion is not yet set on the government’s agenda, Topolánek does plan to discuss the proposal with union representatives Feb. 21, said government spokeswoman Jana Bartošová.
The marketing director of Sodexho Pass, Daniel Čapek, defended his firm’s hiring of No Comment to The Prague Post, saying: “This dialogue [between legislators and the business community], which may be called lobbying, is absolutely legitimate and regular.”
Soon after the Czech TV report, Pohanka seemed to wipe his hands of the coupons, telling Hospodářské noviny: “If the meal ticket cause has become connected with this affair and one is therefore branded an agent of Sodexho, it’s not possible to fight for the meal tickets anymore.”
Necessary deduction
Currently, employers can deduct a maximum 48.30 Kč on each meal ticket given to an employee, or 55 percent of the meal ticket’s total value. The employee foots the remaining 45 percent of the bill. The stravenky are not taken into account when calculating social insurance payments or income tax, effectively reducing the tax base of employer and employee.
The four largest issuers of the vouchers are Sodexho Pass, Accor Services, Cheque Dejeuner and Exit Group. Roland Morizet, Accor’s general manager, defended the meal tickets as a bulwark of traditional European social systems.
“As we speak, meal tickets are deductible company expenditures in a number of European countries, like France, Belgium and neighboring countries, where they are also exempt from social and health insurance contributions,” he said.
But stravenky require government assistance to remain on the market. “Tax deductibility is a necessary condition for the viability of the meal ticket system,” Morizet said.
Meal tickets make up nearly 30 percent of restaurants’ revenues, according to Accor.Since most visitors of restaurants spend an additional 30 Kč above their meal ticket’s value, restaurants might be deprived of up to 40 percent of their total revenues should meal tickets be discontinued, the company said.
“This could have a severe impact on the gastronomy sector and the distribution of foodstuffs. Smaller shops and restaurants might go bankrupt and this would in turn increase tension on the labor market,” Morizet said.
Beyond these financial considerations, Marcela Kubínková, vice president of the Czech and Moravian Confederation of Trade Unions (ČMKOS), warned that an end to stravenky would be a blow to workers’ health.
“Employees would almost certainly reduce their consumption of warm meals,” she said. “This would not only have an impact on restaurants, but means that some employees would move on to less healthy food variants, like fast food and sandwiches. This would, in turn, have a negative influence on the overall health of the population.”
Accor’s Morizet is convinced that “all participants benefit from the meal ticket system.” Morizet, however, would not disclose exactly how much Accor would lose should the tax deduction be eliminated.
Čapek of Sodexho Pass was more forthcoming, saying the company’s profit from stravenky is no more than 9 percent. “If you compare this with other business activities, where profit numbers reach tens or hundreds of percent, we remain on a very different level,” he said.
On average, profit margins reach 4 percent, said Exit Group’s Vladimír Filip. Whatever way the pendulum swings, Exit Group is determined to remain in the stravenky business. Changes in the law would only apply to private companies, Filip added, and one of Exit Group’s largest customers is the Finance Ministry.

Michael Heitmann can be reached at mheitmann@praguepost.com


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