Michael McGrath
Ceist:186 Deputy Michael McGrath asked the Minister for Finance his views on the success of the cycle to work scheme since its inception; and if he will make a statement on the matter. [21606/12]
Amharc ar fhreagraTuesday, 1 May 2012
Ceisteanna (127)
Freagraí scríofa
Section 7 of Finance (No. 2) Act, 2008 introduced a change to the benefit-in-kind (BIK) taxation regime in respect of bicycles. The scheme enabled an employer to purchase a bicycle and certain bicycle-related (safety) accessories for an employee, without the employee being liable for BIK. The scheme complemented the existing TaxSaver commuter scheme and was intended to encourage more employees to cycle to and from work. In addition to reducing traffic congestion and lowering carbon emissions, more people cycling to work would improve health and fitness levels.
The tax relief on the cost of a bicycle and equipment is allowed once in a period of five years, this being regarded as a reasonable lifespan for a bicycle. The employer would save on employer's PRSI on the value of the benefit provided to the employee; the employee would save on income tax, employee's PRSI and income levies on the value of the benefit received from the employer.
It is estimated (from industry figures1) that approx. 30,000 bicycles are sold per year under this scheme. This could suggest a cost to the Exchequer in excess of €5m per annum in gross tax foregone; the actual figure would be dependent on the amount claimed per bike. However a number of offsetting factors need to be borne in mind. The Exchequer receives VAT on cycle sales and jobs are provided in the sales and servicing sector, i.e. bikes continue to need spares, maintenance, etc. Also, it is recognised that increased use of cycling is of value in itself from a health and environmental viewpoint. 1(Irish Bicycle Business Association “Report on the Cycle To Work Scheme Tax Incentive, 14th October, 2011,
http://www.ibba.ie/IBBA_Report.pdf)