State targets meal vouchers for employees

Lunch - it's the most important meal of the day here, and often taken out in the many small bistros and restaurants that cater largely to the lunch crowd. But now, with company tax breaks for meal vouchers on the chopping block, there are fears that fewer companies will give out the tickets, and in turn, fewer workers will frequent eating establishments for their midday meals.

"If these benefits are canceled, people will look for another way to have lunch during the work day, and I'm afraid they will go for some sandwich or something," said Václav Stárek, president of the Hotel and Restaurant Association of the Czech Republic (AHR ČR). "Meal vouchers are quite important, not just from the point of view of employee benefits, but it is also directly linked to the public health of the one-third of the population using these [meal] vouchers."

As part of the tax reform proposed by Finance Minister Miroslav Kalousek March 18 and expected to be implemented in 2013, the tax breaks provided for companies to provide meal vouchers or reduced-price lunches in company cafeterias would be revoked. Instead, workers would receive an annual tax break of 3,000 Kč ($178) to compensate.

"This is strongly against people with lower incomes. The proposed deductible from the tax break would not apply to the half-million lowest-paid people, because they aren't paid enough to pay taxes, so they can't benefit from a tax deduction," said Miroslav Sedlák, chairman of the Association of Voucher Systems (APROPOS). And those that do qualify for the tax break would still face a shortfall of around 5,400 Kč in benefits.

Eighty percent of companies provide their employees with meal benefits, Sedlák said; about two-thirds have canteens, and one-third offer the meal vouchers. Of those 80 percent, it's predicted about two-thirds of companies could stop giving benefits, he said.

So far, 6,000 restaurants have signed a petition protesting the cancellation of tax breaks for meal vouchers, and the association said if companies stop giving out meal vouchers, restaurants could see an average drop of 40 percent in lunchtime customers, and a potential annual loss of 7.54 billion Kč in revenue.

"Canceling the meal vouchers would be a problem. I just have hopes that the government will soon realize the size of their circulation. A lot of people depend on it," said Tomáš Kaláb, owner of the restaurant Jiná krajina in Prague 1. Around 40 percent of customers pay with the vouchers at his restaurant, where the lunchtime crowd accounts for 75 percent of his business. "We cannot come up with a cheaper lunch menu. That would mean offering worse meals, and people have already gotten used to a certain quality that we guarantee. People want their pangasius and salmon, and that requires a certain price."

This isn't the first time the government has proposed to end the support for meal benefits, however, and restaurant owners and lobbyists remain somewhat doubtful that this time the change could actually get pushed through against the tide of critics.

"We hope the plans with meal [vouchers] end as they do every year and that the government will not push it through, especially this government because it won't be here anyway," said Tomaš Spousta, manager of Titanic restaurant in Prague 1. Forty percent of his clients pay with meal vouchers. "If meal [vouchers] were canceled, we would have to lay off people as we did when the economic crisis began. We laid off one-third of the staff, and I had to start working."

The loss in customers would come at a time when food prices are steadily increasing due to global pressures, but most significantly from an across-the-board hike in value-added tax (VAT) to 17.5 percent from the 10 percent formerly assigned for foodstuffs. The VAT is planned to go up to 14 percent in 2012, and hit 17.5 percent in 2013.

Company cafeterias dealing with higher food prices and no tax reductions would be hit hard as well, potentially leading to lost jobs.

"Overhead costs would be split to a smaller amount of meals served, and so would be added to the unit price of one meal," Sedlák said. "Operators would have to reduce service or quit providing the service because employees wouldn't want to go there."

And not only would the loss of benefits hurt people's wallets, but it could undermine long-standing traditions.

"It's part of the culture: Czech people like to have a proper lunch," Sedlák said.

- Klára Jiřičná contributed to this report.

Cat Contiguglia can be reached at
ccontiguglia@praguepost.com