by Holger Haubold, ecf, Bicycle economics, Bike to Work, 22.05.2014
Following the example of its northern neighbours, the French government is considering the introduction of tax incentives for home-work travel by bike. In order to study the potential of a tax-free cycling mileage allowance to increase the number of employees cycling to work, a pilot project comprising selected companies and running until December 2014 has been set up.
The pilot project was presented in March 2014 by French transport Minister Frédéric Cuvillier (Socialist Party) as part of an action plan for active transport modes, comprising 25 measures to boost cycling and walking. It will be based on the voluntary participation of companies under the current tax regime.
The main aim of the project is to verify the results of a study published in July 2013 by the French Government’s Cycling Coordination Group (Coordination interministérielle pour le développement de l’usage du vélo, CIDUV). The CIDUV came to the conclusion that an obligatory cycling mileage allowance of € 0.25/km to be paid free of taxes and contributions by all employers would lead to an increase of bike commuting by 50%. The loss of state income of € 109 million would partly be offset by a direct gain of € 35 million for the state budget realised through savings in health-related expenditures. What is more, applying a comprehensive socioeconomic analysis shows that the social benefits of the measure (€ 570 million/year) clearly outweigh the costs (€ 170 million/year). A similar – although not obligatory – tax-free allowance has already been in place for almost 20 years in France’s northern neighbourhood, in Belgium and the Netherlands.
Cycling allowance under discussion for years in France
The idea of introducing a tax-free cycling allowance or other fiscal measures in France to promote cycling to work is also not new. It had already been proposed in the national cycling plan prepared during the previous legislative period by Philippe Goujon, a parliamentarian of the right-wing UMP that was in government at this time. However, both now and then, the cyclist-friendly proposals coming from both sides of the political spectrum seem to meet fierce opposition by the Ministry of Finances, whose Directorate General of the Treasury expressed the opinion that “such a measure would risk to be contradictory to the priority of employment and the sustainability of public finances”.1
This line of argument is surprising to say the least, since commuters using other modes of transport than cycling (and walking) currently receive generous tax benefits that are all but conducive to the aim of sustainable public finances, cost the state budget a lot more than the proposed cycling allowance – and will certainly not foster a sustainable transport system. An example: Car commuters can claim expenses for income tax purposes, while cyclists cannot. The deductable expenses even increase the higher the motor power and the CO2 emissions of the car are.
High time for a more sustainable home-work travel tax regime in France – and in Europe
The reduction of harmful subsidies for car use together with the introduction of fiscal incentives for cycling, while having an overall positive effect on the state budget, would lead to a level playing-field for the different transport modes. Statistics on the share of cycling in home-work travel clearly illustrate why this is necessary: While this share goes up to around 25% in the Netherlands, 12% in the Belgian region of Flanders and 9% in Germany, it only reaches 2.4% in France. More bikes and fewer cars used for home-work travel would help to tackle problems of congestion, pollution and public health. The imposed reduction of car use during the pollution peak in March 2014 in Paris showed the overwhelming positive impact of less urban car traffic on air quality.
ECF advocates for a fiscal level playing-field for all modes of transport throughout Europe and is currently preparing a study on different fiscal regimes in order to identify best practices.www.ecf.com
Cycling-to-work program begins in France
Mon Jun 2, 2014 9:0PM GMT
With an eye on enhancing public health, France has started a bike-to-work program where employees are offered financial incentives if they ride a bike to their workplaces.
The experimental six-month-long program offers as inducement, paying a fraction of a euro, equal to 25 centimes, to employees for every kilometer cycled.
The scheme also intends to reduce air pollution and cut fossil fuel consumption.
It discourages circumvention by forbidding the participants to incorporate other transport schemes unless it is for a combined railroad journey.
French Transport Minister Frederic Cuvillier said, “Public transport and car costs are already reimbursed and I want the bicycle to become a separate mode of transport.”
Elsewhere across Europe, similar plans are underway with workers being offered to likewise be paid per kilometer or help themselves to tax breaks or financial support for buying bicycles.
Looked to increase bike use by 50 percent, the French plan would be tried in a larger scope if successful.
As a means of challenging one’s motor abilities, cycling is credited for warranting more benefits than risks, with a Dutch study claiming that it can extend lifespan by up to 14 months, and has proven a worthwhile escape from sedentary routine.
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