Marc Ó Cathasaigh (Waterford, Green Party)
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154. To ask the Minister for Finance if he will provide a timeline for the roll-out and implementation of the cargo bike scheme; the oversight that will be in place; and if he will make a statement on the matter. [55828/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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Section 118(5G) of the Taxes Consolidation Act (TCA) 1997 provides for the ‘Cycle to Work’ scheme. This scheme provides an exemption from benefit-in-kind where an employer purchases a new bicycle and associated safety equipment for an employee or director up to certain limits, and subject to certain conditions being satisfied.

Currently, those limits are €1,250 for a bicycle and €1,500 for electric bicycles. The scheme does not apply to motorbikes, scooters or mopeds and safety equipment does not include child seats or trailers.

Under section 118B TCA 1997 an employer and employee may also enter into a salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary, in exchange for a bicycle and related safety equipment.

I am advised by Revenue that where a bicycle or safety equipment is purchased under the ‘Cycle to Work’ scheme or through a salary sacrifice arrangement, certain conditions must be met.

These conditions include the following:

1. The bicycle must meet the definition of a ‘pedal cycle’ which means:

- A bicycle or tricycle which is intended or adapted for propulsion solely by the physical exertions of a person or persons seated thereon, or

- A pedelec, being a bicycle or tricycle which is equipped with an auxiliary electric motor having a maximum continuous rated power of 0.25 kilo-watts, of which output is progressively reduced and finally cut off as the bicycle reaches a speed of 25 kilometres per hour, or sooner if the cyclist stops pedalling.

2. The bicycle and related safety equipment must be new and must be purchased by the employer.

3. The bicycle and related safety equipment must be used by the employee or director mainly for the whole or part of their journey to or from work.

4. An employee or director can only avail of the ‘Cycle to Work’ scheme once in any 4-year period, commencing with the date the employee or director is first provided with a bicycle or bicycle safety equipment.

I am amending the ‘Cycle to Work’ scheme in the Finance Bill this year to increase the allowable expenditure incurred by the employer for the provision of a cargo bicycle or e-cargo bicycle and related safety equipment.

The limits that will apply after this change will be as follows:

The first €1,250 in respect of bicycles and related safety equipment.

The first €1,500 in respect of electric bicycles and related safety equipment.

The first €3,000 in respect of cargo bicycles and electric cargo bicycles and related safety equipment.

The Finance Bill 2022 changes, once passed by the Oireachtas, will take effect from 1 January 2023.

The Cycle to Work scheme operates on a self-administered basis, and relief is automatically available provided the employer is satisfied that the conditions of their particular scheme meet the requirements of the legislation. However, where Revenue is conducting a compliance intervention on an employer’s operation of PAYE or its benefit-in-kind arrangements, and the employer in question is participating in the ‘Cycle to Work’ scheme; Revenue staff will frequently examine the employer’s adherence to the conditions of the scheme.

Comprehensive guidance material on the ‘Cycle to Work’ scheme can be found on Revenue’s website, in Tax and Duty Manual 05-01-01g, available on Revenue's website.

Pearse Doherty (Donegal, Sinn Fein)
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157. To ask the Minister for Finance the effective tax rate applied to three banks (details supplied) in each of the years 2020 and 2021; his views on restricting their ability to reduce their corporate tax liability through historic losses in the context of heightened interest income and profitability; and if he will make a statement on the matter. [55909/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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In relation to the Deputy’s query on the effective tax rate for the three banks, section 851A of the Taxes Consolidation Act 1997 precludes the Revenue Commissioners from directly or indirectly disclosing taxpayer information to third parties unless this is specifically provided for in legislation. Therefore, neither Revenue nor I can comment on the tax affairs of any individual or company.

As the Deputy is aware, loss relief for corporation tax is a longstanding feature of the Irish corporate tax system and a standard feature of corporation tax systems in most OECD countries. It recognises the fact that a business cycle runs over several years and that it would be unfair to tax income earned in one year and not allow relief for losses incurred in another. Loss relief works by allowing a deduction for losses incurred in one accounting period against profits earned in another period.

The value of these tax losses to the State is realised through share sales. The banks' share prices recognise a certain value for the tax losses and as such the State will continue to receive value for the balance of tax losses as future sell-downs complete. There would be a negative impact on the valuation of the State’s investments in the banks from a change in tax treatment of losses carried forward.

Despite the scale of losses accumulated, the banks contribute to the Exchequer through the financial institutions levy. It should also be noted that loss relief does not shelter profits made by the banks in all their corporate entities.

In 2018 Department of Finance officials produced a detailed technical note for the Committee on Finance, Public Expenditure and Reform, and Taoiseach on the subject of both bank losses and corporation tax losses more generally (see www.gov.ie/en/publication/436ff7-technical-note-on-the-potential-consequences-of-changes-to-the-treat/). The technical note considered in some detail the potential implications of restricting the use of losses carried forward, or the introduction of a specific time limit or “sunset clause” on loss relief, for Irish banks, for the wider banking sector, or for the corporate sector as a whole. Among other considerations, it examined the possible effect of such a restriction on consumers, with the probability that an increased cost base for the banks would be passed on to the consumer in the form of higher fees, higher interest rates on loans, or lower deposit rates.

The technical note also noted potential negative consequences for the valuation of the State’s banking investments, and for capital levels in the banks with possible resulting regulatory impacts. It also considered potential effects on competition within the banking sector in Ireland, a factor of increasing relevance as banks have since left the Irish market. Taking all these factors into account, it is my view that it would be detrimental to Irish consumers and Irish taxpayers if a restriction were to be placed on the use of losses carried forward by the banks.