The director-general of employers' group IBEC has called on the Taoiseach to delay for one year the introduction of PAYE and PRSI on benefits-in-kind.

In a letter to Mr Ahern, Mr Turlough O'Sullivan said there was a "growing and angry" reaction among IBEC members to the proposed measure since the publication of guidelines by the Revenue last month. "The cost and difficulties of implementation only then became apparent," he said.

Mr O'Sullivan said the timing of the "substantial imposition" on business was inappropriate for several reasons.

He said the measure would add to the difficulties involved in negotiating a social partnership pay deal for the private sector for late 2004.

He said private sector employees were faced with a lower pay settlement than that being awarded to public sector workers, on top of which many would face a substantial tax rise due to the introduction of PAYE and PRSI on benefits-in-kind. Second, the measure would make it more difficult for business to deal with the competitive pressures it was facing, he said. "Many of our high-tech foreign investment companies have expressed dismay when they assessed the effect of this measure, having particular regard to their emphasis on flexible and modern HR practice."

Mr O'Sullivan said the complexities involved in the issue meant that although it was announced on Budget day last year, it took the Revenue until last month to finalise the details. "It is now clear that the extent of the new tax imposition is very much broader for many companies than was expected."

The lateness of the Revenue follow-up on the announcement meant firms were left with an "impossibly short time" in which to assess the implications for the benefits they offer.

"I therefore very strongly urge that the introduction of this measure be delayed for a year," Mr O'Sullivan said.