Paul Murphy (Dublin South West, Solidarity)
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404. To ask the Minister for Finance if he will equalise tax relief on taxsaver commuter tickets to ensure that lower paid workers are not forced to pay more for public transport; and if he will make a statement on the matter. [63317/25]

Simon Harris (Wicklow, Fine Gael)
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As the Deputy may be aware, 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.

Section 118B TCA provides that 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.

This scheme was implemented as tax-exempt benefit-in-kind 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, it should be noted 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 according to their means, is the fairest and most sustainable income tax system in the long term.

Proposals in respect of tax expenditure measures are assessed in accordance with my Department's Guidelines for Tax Expenditure Evaluation. It is important to note that 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. Tax reliefs, no matter how worthwhile in themselves, lead to a narrowing of the tax base and a strong and convincing case for the benefits and outcomes needs to be articulated in order for due consideration to be given for the commitment of scarce taxpayer resources for such reliefs. The expansion of any tax expenditure creates a cost, and that cost must be recovered elsewhere.

It may be of interest to the Deputy that my Department’s Guidelines for Tax Expenditures Evaluation, last updated in 2024, now include that the impact of a tax expenditure from an equality perspective should be considered as part of both ex-ante and ex-post reviews.

As with all tax expenditures and measures, the TaxSaver scheme is kept under review by my officials. I believe the scheme is operating as intended and I have no plans at present to amend the scheme.