Paul Murphy (Dublin South West, Solidarity)
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371. To ask the Minister for Finance to comment on the regressive nature of the tax saver ticket and cycle to work schemes, whereby those on higher incomes benefit from cheaper transport than those on lower incomes; and whether he will make adjustments to the schemes to ensure everybody can benefit. [17457/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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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) 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. Associated safety equipment may include items such as helmets, lights, bells, mirrors and locks.

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 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. However that means that, 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. Although those individuals liable to tax at the higher rate will, as a result, effectively get tax relief at that rate, generally over the course of the tax year they will pay a significantly greater amount of income tax than individuals that are liable to the standard rate of tax. This is due to the progressive nature of the Irish personal income tax system.

In fact, I would note that Ireland has among the most progressive systems of taxes and social transfers of any EU or OECD country. Progressive income tax systems contribute to the redistribution of income and to the reduction of income inequality. 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. 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.

Although both the TaxSaver and Cycle to Work schemes are kept under review by officials, I have no plans at present to amend either. It should be noted, 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. The Terms of Reference of that review will be considered in due course, however it may include examination of possible options to extend or restrict the current scheme or to complement or replace it with a direct expenditure measure.