A Cycle-to-Work Scheme

By John Considine

Five years ago the Irish government, where the Green Party was the minor coalition partner, introduced a cycle-to-work scheme.  The scheme encouraged individuals to cycle to work by allowing the purchase costs of cycling equipment, up to €1,000, to be offset against income tax.  The Minister for Finance stated that, at the time the scheme was introduced, it was estimated that 7,000 employees would avail of the scheme over the first five years at a costs of €0.4m to the Exchequer.  Unfortunately, in an effort to reduce administration costs, the statistics on the uptake of the scheme were not collected.  Almost three years after the scheme was introduced the Irish Bicycle Business Association produced their Report on the Cycle to Work Scheme Tax Incentive.  The report makes some big claims about the success of the scheme and its contribution to the Irish economy.  It is worth looking more closely at some of these claims.

One of the claims in Section 4.3 of the Report is that the scheme has saved "the Economy €15.3million a year".  This figure is derived by using a daily saving of €170 and multiplying this by "90,000 (new cyclists)".  The Minister for Finance claimed 7,000 employees would take up the scheme whereas the IBBA report suggests there will be 90,000 new cyclists.  That's some difference.  The IBBA Report figures have the advantage of being estimated after the scheme was introduced.  It is unfortunate that the government decided against collecting data on the uptake of the scheme.  It would allow us to validate the IBBA data.  If the 90,000 figure is correct then the scheme could have cost the Exchequer a substantial amount in income tax forgone.  It also raises questions about the forecasting ability of those advising the Minister for Finance.

It would be important to validate this €15.3m figure as it seems to comprise the majority of the total of €19m in benefits from the scheme.

The report also claims that recent research (and a newspaper report from May 2011) shows the "decline in deaths for cyclists over the past decade has been greater than for any other group in the research".  It is difficult to find support for this claim when one looks at the table and figure below.  There has been a welcome improvement in the total number of road fatalities in Ireland.  Road fatalities in 2012 are about 40% of what they were in 2000.  However, the numbers do not support a claim that the decline in deaths for cyclists has been greater than for any other group.