Bike2Work Scheme and Budget 2010

Twin-go

Anyone think the government will scrap this next year?

I'm about to go from a hybrid to a road bike and was going to wait until March but will get it before Christmas if things are going to change.

seamus

I doubt it. Doesn't cost a whole lot to implement and doesn't cost the government much in tax.

Diarmuid

I told my gf that it could to go in the budget, so I could use it as an excuse to buy another bike

kenmc

Diarmuid wrote: »

I told my gf that it could to go in the budget, so I could use it as an excuse to buy another bike

what you get?

dayshah

My guess is that it will go.

Its true that it is successful, and maybe doesn't cost so much in tax. But it does cost a bit to administer.

Also, why should someone earning a big salary get a bike for half price, but someone on minimum wage pay the full price. Its the same issue with any tax break.

As a general rule I don't like tax-breaks, it just complicates things. I would prefer the government just directly subsidise bikes. Say give everyone a 40% off voucher.

(Personally I would benefit if it continues as I want to buy a bike soon and am on the top rate)

Beasty

It costs absolutely nothing to administer from the Revenue's perspective. I think it's very unlikely to go. It is popular with the Greens, and now the initial "surge" is over the ongoing tax forgone is very small.

Diarmuid

kenmc wrote: »

what you get?

CX bike from Wiggle. Focus Mares

seamus

dayshah wrote: »

But it does cost a bit to administer.

Actually costs Revenue next to nothing to administer afair. It's setup as a salary sacrifice, so if I buy a €1k bike this year and I earned €30k this year, my employer simply tells revenue that I earned €29k this year.
The only part that revenue gets involved for is when my employer sends in a notice to them that I have availed of the scheme. Or something.

There is no additional work or calculation on revenue's side - all the work is done by the employer.

Lumen

dayshah wrote: »

Also, why should someone earning a big salary get a bike for half price, but someone on minimum wage pay the full price.

In both cases the person is paying for the bike with money they've earned. It's entirely fair.

dayshah

I accept it is not expensive to administer. But as with all tax-breaks, I think they should be scrapped, and just replaced with subsidies.

The reason tax breaks are used is to disguise how much something costs. With subsidies you know exactly how much a programme costs, and you don't have these strange effects of those on higher incomes benefiting more than those on low incomes.

dayshah

Lumen wrote: »

In both cases the person is paying for the bike with money they've earned. It's entirely fair.

Everyone has a different notion of fairness.

OK so. Why should someone who buys a bike pay less for the countries hospitals, police etc than someone who walks to work?

seamus

dayshah wrote: »

Everyone has a different notion of fairness.

OK so. Why should someone who buys a bike pay less for the countries hospitals, police etc than someone who walks to work?

Someone who walks to work by definition pays less than the person who buys the bike because they haven't paid any VAT on their walking

That's a bit of odd reasoning tbh. What you really want to ask is why people don't get tax breaks for walking to work?

Lumen

dayshah wrote: »

Why should someone who buys a bike pay less for the countries hospitals, police etc than someone who walks to work?

You're moving the goalposts. You suggested subsidies as an alternative. Are you proposing to apply subsidies on shoes to level the playing field? I'm sure the Jimmy Choo fans would appreciate the financial support.

The government uses the tax regime to coerce the population towards things which have societal benefit. In this instance, that coercion is being used to get more people cycling. Having conducted an informal survey of all the E-class and 5 Series drivers I see on my commute, I can state with confidence that those fat old bastards need every encouragement they can get.

Since you're posting in the cycling forum you presumably think this is a good thing, no?

dayshah

seamus wrote: »

Someone who walks to work by definition pays less than the person who buys the bike because they haven't paid any VAT on their walking

That's a bit of odd reasoning tbh. What you really want to ask is why people don't get tax breaks for walking to work?

I do my walking in extra fancy shoes

It would be reasonable I think to eliminate VAT on bikes (or maybe define commuter bikes as ones less than €1000 and with lights and mudguards, I don't think anyone should get a subsidy for a bike that's really just for a hobby). If you eliminate VAT everyone benefits.

I don't think people should get tax breaks for walking. I think the income tax system should have one role, to raise revenue in a fair manner. I don't think it should be used to give incentives for people to cycle.

Lumen

dayshah wrote: »

It would be reasonable I think to eliminate VAT on bikes (or maybe define commuter bikes as ones less than €1000 and with lights and mudguards, I don't think anyone should get a subsidy for a bike that's really just for a hobby). If you eliminate VAT everyone benefits.

There is no practical way to define a commuter bike. I happen to commute on a racer with no mudguards and I use lights that are not sold in Ireland.

You can't do it with VAT because then you'd need a central register of bike ownership, or else it would be easy to circumvent. Would I have to present an ID card at the counter when I make my purchase?

dayshah

Lumen wrote: »

You're moving the goalposts. You suggested subsidies as an alternative. Are you proposing to apply subsidies on shoes to level the playing field? I'm sure the Jimmy Choo fans would appreciate the financial support.

The government uses the tax regime to coerce the population towards things which have societal benefit. In this instance, that coercion is being used to get more people cycling. Having conducted an informal survey of all the E-class and 5 Series drivers I see on my commute, I can state with confidence that those fat old bastards need every encouragement they can get.

Since you're posting in the cycling forum you presumably think this is a good thing, no?

I'm pro-cycling. We can coerce car drivers through motor tax. I don't think we should use the income tax system for that.

I don't propose shoe subsidies. Walkers, cyclists and drivers all wear shoes (though they wear out faster for walkers). Why should we encourage people to buy shoes? People wear them anyway. Also we give money through the social welfare system to people who wouldn't be able to afford their own shoes.

dayshah

Lumen wrote: »

There is no practical way to define a commuter bike. I happen to commute on a racer with no mudguards and I use lights that are not sold in Ireland.

You can't do it with VAT because then you'd need a central register of bike ownership, or else it would be easy to circumvent. Would I have to present an ID card at the counter when I make my purchase?

Why would you need a central register of bike ownership? You commute on a racer, but surely you could also commute on a hybrid, or a bike that is less than €1,000. Do you every use the bike just for fun?

Why would you need a central register. The is VAT on Mars bars, but not on bread. No need to present ID cards there. Just say a commuter bike is defined as costing less than €1,000 and is fully equipped. Anything else can be considered a bike for sport.

If you want to subsidise cycling as a sport (in the same way soccer or hurling are subsidised) then that's a different matter.

Lumen

dayshah wrote: »

I'm pro-cycling. We can coerce car drivers through motor tax. I don't think we should use the income tax system for that.

I don't propose shoe subsidies. Walkers, cyclists and drivers all wear shoes (though they wear out faster for walkers). Why should we encourage people to buy shoes? People wear them anyway. Also we give money through the social welfare system to people who wouldn't be able to afford their own shoes.

Your sole (ha ha) objection to the CTW scheme is that it's not progressive, because it doesn't penalise people who are already supporting the country through higher tax contributions, but you haven't proposed a workable alternative.

dayshah wrote: »

Why would you need a central register of bike ownership? You commute on a racer, but surely you could also commute on a hybrid, or a bike that is less than €1,000. Do you every use the bike just for fun?

Why would you need a central register. The is VAT on Mars bars, but not on bread. No need to present ID cards there. Just say a commuter bike is defined as costing less than €1,000 and is fully equipped. Anything else can be considered a bike for sport.

If you want to subsidise cycling as a sport (in the same way soccer or hurling are subsidised) then that's a different matter.

What's to stop a hybrid enthusiast buying ten of them and using them for hobby cycling or doing drop bar conversions?

Why should I be forced to commute on a hybrid? Why can't everyone commute on a racer? And how will you even define a hybrid?

You're trying to impose your idea of what constitutes an ideal commuting bike on everyone else, purely to satisfy your need to penalise higher rate taxpayers.

Gophur

It's a scheme which has been royally abused. Too many people have availed of it without entitlement, too many people who could benefit as much as some of those who availed of it, are prevented from doing so.

Why tie it into work commute? I have a neighbour who drives 60 miles to work every day, who got one on the scheme. He has a €600 bike he's never ridden.

Look at all the bikes for sale on the Net? It's blatantly obvious they are BTW purchases being sold for a quick €100 or €200.

I'd be all for keeping the scheme, or expanding it to allow any person buy such a bike for personal use.

Net cost to Govt for a €1,000 purchase is probably the lost PRSI, €120 ish. Meanwhile there is an industry (cycle shops) thriving and some general well-being amongst the cycling fraternity.

dayshah

Gophur wrote: »

It's a scheme which has been royally abused. Too many people have availed of it without entitlement, too many people who could benefit as much as some of those who availed of it, are prevented from doing so.

Why tie it into work commute?

I agree. People on high salaries benefit. But what about people who need transport, but are on a low wage, unemployed, retired. Should they not also be encouraged to give up their car?

@Lumen

I wouldn't define a hybrid. I'd just say a commuting bike costs less than say, €800 (I said €1,000 earlier, but I decided to fine you for commuting without mudguards )

The progressive aspect is part of it. As stated I don't think the income tax system should be used to incentivise people with regard to how they travel.

Overall I don't think bike are in some way fundamentally good for society. They aren't bad, just like Mars bars they are neutral. In contrast I think cars have a bad impact on society.

So I don't think we should encourage people to cycle. I just think we should just discourage people from using polluting cars. Then not try influence people about their own decisions as to whether walk or cycle. Jack up tax on cars. This will allow less tax on everything else, and people will have more money if they want to buy a bike or not.

Lumen

dayshah wrote: »

I think cars have a bad impact on society.

So I don't think we should encourage people to cycle. I just think we should just discourage people from using polluting cars. Then not try influence people about their own decisions as to whether walk or cycle. Jack up tax on cars. This will allow less tax on everything else, and people will have more money if they want to buy a bike or not.

...except that cyclists and motorists are not exclusive populations. Regardless of how I get to work I still need to run two cars.

Cars are already massively highly taxed and there's a limit to how much you change people's behaviour before you distort markets so much that the unintended consequences swamp the intended ones.

The CTW scheme is not perfect, but considering the amount of regulatory effort it takes to manage (i.e. none) it's a pretty good first stab.

dayshah

Lumen wrote: »

...except that cyclists and motorists are not exclusive populations. Regardless of how I get to work I still need to run two cars.

Cars are already massively highly taxed and there's a limit to how much you change people's behaviour before you distort markets so much that the unintended consequences swamp the intended ones.

The CTW scheme is not perfect, but considering the amount of regulatory effort it takes to manage (i.e. none) it's a pretty good first stab.

Well instead of jacking up motor tax I'd rather jack up the price of petrol and diesel. It would have to be done on a 32 county basis though.

kona

dayshah wrote: »

My guess is that it will go.

Its true that it is successful, and maybe doesn't cost so much in tax. But it does cost a bit to administer.

Also, why should someone earning a big salary get a bike for half price, but someone on minimum wage pay the full price. Its the same issue with any tax break.

As a general rule I don't like tax-breaks, it just complicates things. I would prefer the government just directly subsidise bikes. Say give everyone a 40% off voucher.

(Personally I would benefit if it continues as I want to buy a bike soon and am on the top rate)

Because they worked harder, sacrificed more and now are paid more because their knowledge is more important.

Generally people of lower wages are not qualified, didnt get any qualifications. People of lower wages get enough handouts for free as it is.

Im sick of listening to people moan about this, it does my nut in. Your not earning over 30k a year because the government decided you should and jacithe down the road gete 20K a year.
This is another problem with this country.
I truely hope EVERYBODY get nailed in the budget, no hiding behind excuses. Everybody should pay something, maybe not as much as others but this notion of the rich paying the majority of tax while the "poor" pay nothing is bollix.

Beasty

Just to kill-off the VAT idea, this would contravene EU law (and VAT is an EU tax, albeit funding respective national governments).

dayshah

Beasty wrote: »

Just to kill-off the VAT idea, this would contravene EU law (and VAT is an EU tax, albeit funding respective national governments).

Really? I know there is no VAT on food.

If its an EU tax how come it varies from country to country?
I know there are rules to harmonise how VAT is applied, so that we wouldn't charge zero VAT in Ireland on bikes and then sell them online to France. Is it a new rule?

Are you an accountant?

dayshah

kona wrote: »

Because they worked harder, sacrificed more and now are paid more because their knowledge is more important.

Generally people of lower wages are not qualified, didnt get any qualifications. People of lower wages get enough handouts for free as it is.

Im sick of listening to people moan about this, it does my nut in. Your not earning over 30k a year because the government decided you should and jacithe down the road gete 20K a year.
This is another problem with this country.
I truely hope EVERYBODY get nailed in the budget, no hiding behind excuses. Everybody should pay something, maybe not as much as others but this notion of the rich paying the majority of tax while the "poor" pay nothing is bollix.

I suppose you are a real Bill Cullen character, pulled yourself up by the bootstraps (despite walking to school with no shoes), never got a free education from the state, or a hand out from wealthy parents. :rolleyes:

If you want fair tax why should be judged on whether or not you bought a bike this year?

kona

dayshah wrote: »

I suppose you are a real Bill Cullen character, pulled yourself up by the bootstraps (despite walking to school with no shoes), never got a free education from the state, or a hand out from wealthy parents. :rolleyes:

If you want fair tax why should be judged on whether or not you bought a bike this year?

No Im just ****ing sick of this society being split between the people who get their head down and work.
And the side who always play the victims.

Exactley free education from the state, in the last decade there is no excuse to be unqualified unless your lazy.

Too much dead weight.

Roll eyes all you want, the country is ****ed, we dont have moeny and were paying 9% to borrow, no escaping that, if your not willing to take the pain and pay, then you deserve nothing.

The person getting 40% off their bike has earned that, they worked for it. why should somebody earning less get the same? they didnt earn it.

P.S fair play to Bill Cullen, he worked for what he has.

dayshah

kona wrote: »

No Im just ****ing sick of this society being split between the people who get their head down and work.
And the side who always play the victims.

Exactley free education from the state, in the last decade there is no excuse to be unqualified unless your lazy.

Too much dead weight.

Roll eyes all you want, the country is ****ed, we dont have moeny and were paying 9% to borrow, no escaping that, if your not willing to take the pain and pay, then you deserve nothing.

So can we afford the bike scheme or not? Or you just want a go at the poor?

There is more to access to education than free fees. It starts at primary schools. There are plenty with high incomes because they inherited their position. Also there are plenty of hard working people who are not paying at the top rate of tax. People on low wages or who earn their own business. Plenty who would love to cycle to work, but the jobs aren't there. Nothing sickens me more than people who are all for cuts, except when it comes to a tax-break for their own bike.

Tax cuts rewards those who earn the most. Bike subsidies would reward those who cycle. But why devise a policy that targets high earners who cycle?

I really don't see why you'd turn a discussion about the bike to work scheme into a broadside against people who don't pay tax at the top rate.

EDIT:
Bill Cullen got a hand out with the car scrappage scheme. Even he got help from people.

Lumen

dayshah wrote: »

Tax cuts rewards those who earn the most.

As stated already, the CTW allows people to use exactly the money they've earned. Tax rates are irrelevant.

And people who own their businesses can avail of the scheme if they are on PAYE/PRSI. Whether or not that's the case is entirely the choice of that person.

ROK ON

I agree with Kona on one principle, and that is that everyone should pay something in society.

In general I would seek to close all tax leakages from the economy in order to lessen the more deflationary impact of general tax increases. So while the BTW is small I would close it along with all other schemes of tax relief. On the subject of tax, an area that gets damn all attention is the comical tax status of the huge Bloodstock industry in this state. We have seriously wealthy people who pay no tax whatsoever thru this scheme. It is a sizeable enough industry supported largely by oil sheiks and the user wealthy. As for the employment creation it provides. Well it certainly provides employment for many folk, but so much of it is at a very low level that is likely to be below the threshold. I see no reason that the same rate of tax that applies to corporate profitability should not apply here. At least the multinational sector in Ireland contributes handsomely to the tax pool thru income tax on employees that are in the main well paid.

kona

dayshah wrote: »

So can we afford the bike scheme or not? Or you just want a go at the poor?

There is more to access to education than free fees. It starts at primary schools. There are plenty with high incomes because they inherited their position. Also there are plenty of hard working people who are not paying at the top rate of tax. People on low wages or who earn their own business. Plenty who would love to cycle to work, but the jobs aren't there. Nothing sickens me more than people who are all for cuts, except when it comes to a tax-break for their own bike.

Tax cuts rewards those who earn the most. Bike subsidies would reward those who cycle. But why devise a policy that targets high earners who cycle?

I really don't see why you'd turn a discussion about the bike to work scheme into a broadside against people who don't pay tax at the top rate.

EDIT:
Bill Cullen got a hand out with the car scrappage scheme. Even he got help from people.

Im attacking the rather retarded IMO , opinion that you feel everybody should get 40% off bikes, and the government should foot the bill.
You should get out what you put in.
If tax cuts reward those that earn the most is that not a incentive to get up off your hole and get a degree and try get into a position where your not getting shafted?
This country is full of lazy ****ers who take the easy way out of everything, hence the mess we are in now.

Bill Cullen had to work his ass off to get into a position to avail of the scrappage scheme, along with the many other dealers.

You seem to think that you should get the rewards without the work. FWIW I dont think anybody in this country deserves a salary over 150k a year. Its insane that some people have non contributary pensions too. thats just unreal.
However nobody should be exempt from this mess, yes we are bailing out the dumb decisions of other people, but unfortunatley thats the mess we are in, everybody has to pay, you cant just pick a social group and load em with taxes. Naturally the more you earn the more tax you pay. Some people dont pay any tax what so ever, what akes them special? maybe they shouldnt be whacked with 20% but they should maybe pay 5% , its absurd to have some people paying something and others paying nothing.

FWIW I dont have cycle 2 work, I saved my money and bought my bikes myself, I wont be getting a bike on cycle2work because I dont need one. However I think it should be kept on, as Its kept me in a job and many others.

dayshah

Lumen wrote: »

As stated already, the CTW allows people to use exactly the money they've earned. Tax rates are irrelevant.

Depends on what you mean by earned. The state paid for my education, I'm happy to pay my dues back to the state (even if the government are making a feck of everything).

The arguments you are making are only consistent if you are in favour of a flat tax rate. Fair enough if you are (I'm not) but that's a discussion for a different forum. If it holds for bikes why should the money I spend on Mars bars not be based on my 'earned' income rather than my after-tax income.

If you generally want to encourage cycling why have a policy that disproportionately benefits those on high incomes. Is it not just as good for road congestion to have minimum wage workers on bikes as to have higher earners on bikes?

dayshah

kona wrote: »

Im attacking the rather retarded IMO , opinion that you feel everybody should get 40% off bikes, and the government should foot the bill.

If you actually read the thread you would see me preferred option is no scheme.

kona wrote: »

FWIW I dont have cycle 2 work, I saved my money and bought my bikes myself, I wont be getting a bike on cycle2work because I dont need one. However I think it should be kept on, as Its kept me in a job and many others.

Ah, so thats why, kona wants a handout from the government

Lumen

dayshah wrote: »

Depends on what you mean by earned. The state paid for my education, I'm happy to pay my dues back to the state (even if the government are making a feck of everything).

The arguments you are making are only consistent if you are in favour of a flat tax rate. Fair enough if you are (I'm not) but that's a discussion for a different forum. If it holds for bikes why should the money I spend on Mars bars not be based on my 'earned' income rather than my after-tax income.

If you generally want to encourage cycling why have a policy that disproportionately benefits those on high incomes. Is it not just as good for road congestion to have minimum wage workers on bikes as to have higher earners on bikes?

The state didn't pay for my education since I am an immigrant. Still, I'm happy to pay taxes and bring business into the country provided that those taxes are not pissed down the drain bailing out the consequences of inept banking regulation and profligate state spending. Oh, wait...

The policy does not disproportionately benefit those on high incomes. Your proposal disproportionately penalises those on high incomes. The CTW scheme is entirely tax rate neutral, since income taxes are not applied.

Your confusion perhaps comes from an apparent belief that the state has first call on any generated wealth, and that we should all be grateful for any pitiful scraps thrown our way from whatever is left.

Good luck with your progressive taxation schemes when all the people who generate wealth have taken their talents elsewhere.

dayshah

Lumen wrote: »

Your confusion perhaps comes from an apparent belief that the state has first call on any generated wealth, and that we should all be grateful for any pitiful scraps thrown our way from whatever is left.

Good luck with your progressive taxation schemes when all the people who generate wealth have taken their talents elsewhere.

Its neither a belief nor a confusion, its reality. We have progressive taxation, and government takes first call, whether we like it or not. Before the scheme everyone paid €500 for a bike worth €500. Now one group pays €500, and the other pays about €300. Compared to the alternative of no scheme one group clearly pays more.

The notion that we should be allowed spend out of our gross income only makes sense if we have a flat tax. Otherwise you are asking those who walk to work to subsidise those who cycle. I don't see why they should pay more because they don't cycle.

dayshah

ROK ON wrote: »

I agree with Kona on one principle, and that is that everyone should pay something in society.

In general I would seek to close all tax leakages from the economy in order to lessen the more deflationary impact of general tax increases. So while the BTW is small I would close it along with all other schemes of tax relief. On the subject of tax, an area that gets damn all attention is the comical tax status of the huge Bloodstock industry in this state. We have seriously wealthy people who pay no tax whatsoever thru this scheme. It is a sizeable enough industry supported largely by oil sheiks and the user wealthy. As for the employment creation it provides. Well it certainly provides employment for many folk, but so much of it is at a very low level that is likely to be below the threshold. I see no reason that the same rate of tax that applies to corporate profitability should not apply here. At least the multinational sector in Ireland contributes handsomely to the tax pool thru income tax on employees that are in the main well paid.

I agree that just about every tax shelter should be closed. I think you are going a bit off topic though.

Before the bike scheme I bought a bike, so I didn't benefit from the scheme. I don't have space for another one (though I could make room if I wanted), and I pay at the top rate.

Kona wants me to pay more tax than my friend who earns about the same, but bought a racing bike on the scheme for weekend use (he uses his old bike for going to work as he wouldn't want to lock up his new good bike in work).

Why should I subsidise my friends hobby? So kona stays in his job?

I'd much rather subsidise hurling, or let the money be used to build schools or something useful to society at large. The scheme doesn't promote a general increase in cycling as those on lower wages have no incentive to buy a bike over what was the case before the scheme was introduced.

Diarmuid

dayshah wrote: »

Its neither a belief nor a confusion, its reality. We have progressive taxation, and government takes first call, whether we like it or not.

It's not reality. You can move to another country and avoid all the Irish government's taxes. And if you keep up with your "progressive" tax policy, the wealth generators will go.

dayshah

Diarmuid wrote: »

It's not reality. You can move to another country and avoid all the Irish government's taxes. And if you keep up with your "progressive" tax policy, the wealth generators will go.

Go where? Most of Eastern Europe use a flat tax, and all of Western Europe, US, Canada, Australia have progressive taxes. Here is a link to a map. http://upload.wikimedia.org/wikipedia/commons/5/5d/Flat_tax_in_Europe.svg

Now which direction do you think the migration is?

Anyway what has that got to do with cycling to work? Not many people are going to commute from Ireland to Bulgaria.

Lumen

dayshah wrote: »

Now which direction do you think the migration is?

I know! I know! Out of Ireland.

ROK ON

In one sense the present tax system is both highly progressive and not.
By that I mean that a disproportionately large % of the tax take is paid by PAYE workers that are well paid. Also ireland has an incredibly generous level at which a PAYE employee pays little or no tax.
No the anomalies are that highly paid self employed people pay significantly less tax when compared to similarly paid people in the PAYE sector.
Furthermore the tax bands are designed in a criminally irresponsible fashion that one can earn a reasonable amount without paying tax, and then once they start paying tax they end up paying some at the higher rate.

We have the financially illiterate McCreevey (an accountant) to thank for that stroke of taxonomic genius.

Beasty

dayshah wrote: »

Really? I know there is no VAT on food.

Food is zero rated - when VAT was introduced it was possible to obtain zero rating for certain essentials (food being one of them). However once you start charging VAT on a particular item it is not possible to go back to zero rating

dayshah wrote: »

If its an EU tax how come it varies from country to country?
I know there are rules to harmonise how VAT is applied, so that we wouldn't charge zero VAT in Ireland on bikes and then sell them online to France. Is it a new rule?

Rates vary, but the basic rules are the same, and are governed by EU treaties and regulations. It is possible to apply a lower rate (as happens with energy)

dayshah wrote: »

Are you an accountant?

Yes, but for the last 25 years or so I have specialised in tax matters

dayshah

Lumen wrote: »

I know! I know! Out of Ireland.

Not many Irish people migrating to Latvia or Romania. They are migrating to other countries that also have progressive taxation.

mike12

The CTW scheme costs the government very little if anything at all what they loose out in tax they gain in VAT and the Tax on the profits the bike shops are making. The idea of the scheme was to get more people cycling to work as long as u use it even every now and then to cycle to work who cares what else you do with the bike. Plus there are the health benifits for the long term the healthier and fitter the population the fewer people in hospital the cheaper it is for the health services.
Mike

dayshah

ROK ON wrote: »

In one sense the present tax system is both highly progressive and not.
By that I mean that a disproportionately large % of the tax take is paid by PAYE workers that are well paid. Also ireland has an incredibly generous level at which a PAYE employee pays little or no tax.
No the anomalies are that highly paid self employed people pay significantly less tax when compared to similarly paid people in the PAYE sector.
Furthermore the tax bands are designed in a criminally irresponsible fashion that one can earn a reasonable amount without paying tax, and then once they start paying tax they end up paying some at the higher rate.

We have the financially illiterate McCreevey (an accountant) to thank for that stroke of taxonomic genius.

Yes, plenty of loop holes just make everything over complicated. Of course the self-employed I suppose have an even better bike scheme though as they can write off the VAT and consider the bike an expense when calculating the tax bill.

Lumen

dayshah wrote: »

Yes, plenty of loop holes just make everything over complicated. Of course the self-employed I suppose have an even better bike scheme though as they can write off the VAT and consider the bike an expense when calculating the tax bill.

Yes and no. The rules are in effect much stricter.

To satisfy the CTW scheme you must only intend at the time of purchase to use the bike mainly for commuting to your place of work (I think that's the wording). You can decide a week later that it's all too scary and that you just want to potter around Wicklow at the weekends instead, or sell the bike on.

The bar is much higher for a business-owned bike. AFAIK it must be used exclusively for business purposes whilst that asset belongs to the company. You can't change your mind after a couple of months and start using it for weekend spins instead. I think. Beasty can correct.

Ryaner

seamus wrote: »

Actually costs Revenue next to nothing to administer afair. It's setup as a salary sacrifice, so if I buy a €1k bike this year and I earned €30k this year, my employer simply tells revenue that I earned €29k this year.

The Revenue will actually get both figures but it requires some working out. Mainly due to the income levy is how it can be worked out.

dayshah wrote: »

So can we afford the bike scheme or not?

The cost per year on an accounting basis is very low to the exchequer. Add in the savings from a healthier population, the reduce in carbon costs, the increased vat intake, it is sure to be at least cost neutral.

When you factor in the fact is one of the things keeping the greens in with the Gov, it'll not go in the budget.

Lumen wrote: »

The policy does not disproportionately benefit those on high incomes. Your proposal disproportionately penalises those on high incomes. The CTW scheme is entirely tax rate neutral, since income taxes are not applied.

The scheme comes out after the income levy is applied.

dayshah wrote: »

Yes, plenty of loop holes just make everything over complicated. Of course the self-employed I suppose have an even better bike scheme though as they can write off the VAT and consider the bike an expense when calculating the tax bill.

You can not write off the vat under the scheme. If you are purchasing a bike for company use, yes you can claim back the vat but it can not be purchased under C2W. It is also quite hard to prove you need a normal bike for company usage.

Beasty

Lumen wrote: »

The bar is much higher for a business-owned bike. AFAIK it must be used exclusively for business purposes whilst that asset belongs to the company. You can't change your mind after a couple of months and start using it for weekend spins instead. I think. Beasty can correct.

Agreed the bar is higher - self employed cannot have any tax relief for cycling to work

However if the bike is used within the business (eg self-employed courier), the proportion of private use is disallowed. So if it's used 60% for business purposes, the business can claim 60% of the cost. It's further complicated, because you cannot claim full relief up-front - you basically claim capital allowances over the "life" of the bike.

Diarmuid

dayshah wrote: »

Go where? Most of Eastern Europe use a flat tax, and all of Western Europe, US, Canada, Australia have progressive taxes. Here is a link to a map. http://upload.wikimedia.org/wikipedia/commons/5/5d/Flat_tax_in_Europe.svg

I put progressive in quotes for a reason.

dayshah wrote: »

Now which direction do you think the migration is?

Is that a rhetorical question?

dayshah

@ Beasty

Are these strict rules enforced for a small business, or would Reveue let you off if you just cycle to your small business, maybe do some odd jobs with it.


@Diarmuid
Yes. Its blatantly obvious that migration is away from countries that use flat taxes and towards Western Europe, US, Australia etc.

@Ryaner
I agree there are benefits to cycling. But if we want to promote it why not promote it amongst the whole population (school kids, students, people on low wage/3 day week, the retired)?
You have a good point that the greens will want it kept.

@mike12
This is why I dislike all tax-breaks. We don't know how much it costs. There is the loss of tax, but then there is the VAT. If it was just a direct subsidy we would know the cost. This is why governments use tax-breaks. They pretend they are free to the taxpayer. This can't be true, there is no such thing as a free lunch.

Financially the government doesn't benefit directly. We benefit from health (unless you are hit by a car) and less pollution, road maintenance, petrol imports. But we don't benefit from more VAT or bike shop profits.

Suppose the government didn't do this. They could use the money to boost employment building schools or cycle-paths. I didn't use the scheme to buy an imported bike from France/China/Germany. So instead I spent more money in the local economy going on nights out and enjoying myself. I also left some money in the bank. This means the government doesn't have to inject so much capital into the banks. Finally the government would have gotten €150 extra in tax (€400, but lose out on the VAT etc).

Anything that boost imports does not promote the domestic economy. Bike 2 work is not nearly as damaging as the car scrappage scheme though. However you are used the same flawed economic logic that ignores the impact on the Current Account.

The economic benefits are less health costs, road maintenance, and petrol imports. There are no direct fiscal benefits.

Beasty

It's not "enforced" by the Revenue as such - it's down to employers to police it, but any arrangement may be subject to audit.

However self-employed are taxed under a different system to the employed, who pay tax unxder the PAYE system. The scheme only works if you are taxed under PAYE. Hence by definition the self-employed cannot benefit (although employees of the self-employed are taxed under PAYE and can benefit). I would add that some small businesses are actually limited companies, and directors can take advantage of the scheme. The general rule is it must be available to all employees and directors.

On the general point of tax breaks, everyone gets them. It may be in the form of tax credits, or allowances. Even the zero rates of VAT on food and kids clothing are tax breaks. You may not agree with all of them, but a tax system cannot work without them

In terms of the Bike to Work scheme, the amounts involved are minimal - I would guess that after an initial surge the annual net cost to the wider taxpayer is probably in the very low €millions - perhaps €1-2m or so. It's probably one of the least costly of all tax breaks out there. That's not to say it's immune from potential Government action, I just think it is very unlikely, and would probably need a complete change in tax policy (which I accept may be more likely under a different Government)

Lumen

dayshah wrote: »

Yes. Its blatantly obvious that migration is away from countries that use flat taxes and towards Western Europe, US, Australia etc.

Are you suggesting that people are migrating away from the flat taxes? That's a completely absurd suggestion. You haven't even proven correlation let along causation. Flat taxes are simpler to administer/enforce (see Laffer Curve) and promote enterprise. That's why they are popular in dynamic economies.

dayshah wrote: »

This is why I dislike all tax-breaks.

A tax allowance is a tax break, so I assume you're in favour of making those on minimum wage pay income tax and levy on all earnings?