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Rise in employment taxes leads to greater non-cash compensations

A rise in taxes on legal employment that has seen workers lose an average of 3.5% of their take-home pay since last September has led to a corresponding increase in the use of holiday „vouchers” and other non-cash forms of compensation by Hungarian businesses, according to a recent study conducted by Mercer Kft.

In the Q1 of 2007, 254,000 Hungarians received holiday vouchers from their employers, double the number in 2006. According to data collected by the Hungarian National Holiday Foundation (MNÜA), employers have spent Ft 5.5 billion (€22.3 million) on the vouchers so far this year. Péter Kiss, Minister of Employment said he expected this figure to reach Ft 20 billion by the end of the year, offering relief to upwards of 800,000 employees and dependents.

In addition to travel vouchers, companies are increasingly rewarding employees with subsidies for home Internet access, and the ubiquitous meal tickets redeemable for groceries and restaurant meals. According to Mercer's study, such in-kind compensation not subject to most payroll taxes could be broadened in the future, to include contributions to health care programs.

Meanwhile, the MNÜA is planning to extend the scope of services available for holiday vouchers, reports hirado.hu. MNÜA President Mihály Karácsony said it is possible that the vouchers could be used for renting cars, tents or skis, and possibly be redeemed for travel insurance. (caboodle.hu)