Dáil Éireann Debate, Tuesday - 10 February 2026
190. Deputy Paul Murphy asked the Tánaiste and Minister for Finance if he will end the inequity in access to the bike-to-work and taxsaver public transport schemes whereby workers on the standard rate of tax receive lower benefits than higher paid workers; and if he will make a statement on the matter. [9559/26]
Amharc ar fhreagraI thank the Deputy for his question on the bike-to-work and the TaxSaver scheme.
Section 118(5A) of the Taxes Consolidation Act 1997 (TCA) provides an exemption from benefit-in-kind (BIK) where an employer purchases a travel pass for an employee. This is commonly known as the TaxSaver scheme.
Similarly, section 118(5G) of the TCA provides for the Cycle to Work Scheme. This scheme offers an exemption from BIK where an employer purchases a bicycle and/or associated safety equipment for one of their employees (or directors) to use, in whole or in part, to travel to work.
Under section 118B TCA, an employer and employee may enter into a Revenue-approved salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary, in exchange for a benefit such as those provided under the aforementioned schemes.
These schemes were implemented as tax-exempt benefit-in-kinds in order to keep the implementation as simple as possible and reduce administrative burden on the part of employers. Consequently, under these schemes, the qualifying benefit is exempt from income tax, PRSI and USC at whichever rate the taxpayer would otherwise be liable to pay.
Ireland’s income tax system generally ensures that the burden of taxation falls most heavily on those with a higher ability to pay. This means that those on lower incomes pay less income tax as a share of their income than those on higher incomes. Those individuals liable to tax at the higher rate will, as a result, get greater tax relief as this is at their marginal rate. Due to the progressive nature of our income tax system, higher-rate taxpayers over the course of the tax year pay a significantly greater amount of income tax than taxpayers at the standard rate of tax.
Progressive income tax systems contribute to the redistribution of income and to the reduction of income inequality. With regard to the vertical equity principle of taxation, I would note that Ireland has among the most progressive systems of taxes and social transfers of any EU or OECD country.
It is my view that a broad-based, progressive income tax system, where the majority of income earners make some contribution but according to their means, is the fairest and most sustainable income tax system in the long term.
As with all tax expenditures, both the TaxSaver and Cycle to Work schemes are kept under review by officials.
The Deputy should note, however, that the Programme for Government 2025, "Securing Ireland's Future", contains a commitment to, within the lifetime of this Government, conduct a review of the Cycle to Work scheme with the aim of boosting take-up among all workers. I remain committed to this.
