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Tax Data

Dáil Éireann Debate, Wednesday - 13 July 2022

Wednesday, 13 July 2022

Questions (137, 138, 166)

Gerald Nash

Question:

137. Deputy Ged Nash asked the Minister for Finance the number of persons who availed of the bike to work scheme in each of the years 2017 to 2021; the cost of the scheme in each of the years; the number of persons who accessed the maximum amount of tax relief in each of those years; the average tax relief in each year; and if he will make a statement on the matter. [38637/22]

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Gerald Nash

Question:

138. Deputy Ged Nash asked the Minister for Finance savings to the exchequer by decreasing the current tax relief on bike to work schemes to €500; and if he will make a statement on the matter. [38638/22]

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Gerald Nash

Question:

166. Deputy Ged Nash asked the Minister for Finance the estimated cost of introducing a cycle to school scheme based on the cycle to work scheme in which a parent can claim back the cost of one bicycle per child through their salary; and if he will make a statement on the matter. [38674/22]

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Written answers

I propose to take Questions Nos. 137, 138 and 166 together.

Section 118(5G) of the Taxes Consolidation Act 1997 (TCA 1997) provides for the Cycle to Work scheme. This scheme provides an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and associated safety equipment for an employee.

The work scheme operates on a self-administration basis. Relief is automatically available provided the employer is satisfied that the conditions of its particular scheme meet the requirements of the legislation. There is no notification procedure for employers involved. This approach was taken with the deliberate intention of keeping the scheme simple and reducing administration on the part of employers. Accordingly, there are no records available on the number of people availing of the scheme, or the number who accessed the maximum amount of tax relief or the cost of the scheme.

Tax expenditure reports prepared by my Department have estimated the cost in the full years 2017-2019 at €4 million (based on an assumption of 20,000 beneficiaries) and notes that this figure is an estimate as separate returns are not required under the scheme. This estimate was increased to €4.5 million in 2020 on foot of the changes made to the scheme by Section 9 of the Financial Provision (Covid-19)(No.2) Act 2020. This increased the allowable expenditure from €1,000 to €1,500 in respect of e-bikes and €1,250 in respect of bicycles and allowed the purchase of a new bicycle every 4 years instead of 5. The estimate was €5.5 million for 2021 with the full year impact of the changes. With an assumption of 20,000 beneficiaries, this gives an average of €275.

The potential cost of a cycle to school scheme would depend on uptake and the marginal rate of tax being paid by the parent and the threshold value allowed under such a scheme. CSO data from Census 2016 shows that 7,326 children aged between 5 and 12 years, and 7,282 students at school or college aged between 13 and 18 years used bicycles as their means of transport. This could give a potential uptake of over 14,000 but each child would not get a new bicycle each year.

Making certain assumptions in relation to cost and uptake on a similar basis as used for reporting on the cycle to work scheme in the tax expenditure reports, such a scheme is tentatively estimated to have a potential annual cost of approximately €1 million. However, the technical and administrative details of how such a scheme would operate would also need to be considered and could impact significantly on cost.

I should add that including bicycles for use by children to cycle to school would add to the administrative burden on employers of participating in the scheme. Furthermore, I would expect considerable deadweight in such a proposal with people benefitting who would have purchased a bicycle in any event.

If the threshold for the cycle to work scheme was reduced to €500, the estimated cost of the scheme would be reduced on a straight line basis by €3.5 million to €2 million. This is based on other assumptions such as number of beneficiaries remaining unchanged.

Question No. 138 answered with Question No. 137.
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