I have interpreted the Deputy's question as referring to the Taxsaver scheme, which, as the Deputy may be aware, is provided for in section 118(5A) of the Taxes Consolidation Act 1997 (TCA). The scheme provides an exemption from benefit-in-kind (BIK) where an employer purchases a travel pass for one of their employees or directors, subject to certain conditionality.Under section 118B TCA, an employer and employee may also enter into a Revenue-approved salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary in exchange for the benefit.
Where a travel pass is purchased under the BIK scheme or through a salary sacrifice arrangement certain conditions must be met, for example:
• the cost incurred must relate to a monthly or annual bus, railway or ferry travel pass;
• the travel pass must be issued by or on behalf of one or more approved transport providers; and
• the approved transport provider must be contracted or licensed to provide the transport services covered by the travel pass.
While the conditionality around the BIK exemption for the Taxsaver scheme falls under the remit of the Minister for Finance, the scope and conditions of the travel passes on offer are a matter for the individual transport providers. Furthermore, in respect of the day-to-day operations of public transport, including TaxSaver ticket offerings, it is the National Transport Authority which has responsibility for the regulation of fares charged to passengers in respect of public transport services provided under Public Service Obligation contracts.
It is important to note that employers are not required to take part in the Taxsaver scheme. However, by way of incentive, if an employer does participate in the scheme, they will also save money as employer’s PRSI is not payable on the cost of the relevant benefit(s) when they make the associated deduction from their employees' salary payments.
It is also important to note Government policy is based on the principle that tax expenditures should be used in limited circumstances where a demonstrable market failure exists, and the measure is more efficient than a direct expenditure intervention. In its comprehensive review of the Irish tax system, the Commission on Taxation and Welfare (2022) supported this position.
In considering proposals in respect of tax expenditures, the Government must be mindful of the public finances and the many demands on the Exchequer. The expansion of any scheme creates a cost, and that cost must be recovered elsewhere. While the Taxsaver scheme is kept under review by my officials, at present I do not have any specific plans to amend this scheme.
