Tax Treatment of Employer Commuting Support: An International Review

Abstract

Correctly pricing transport behaviour to take account of the ‘external’ costs such as congestion and emissions imposed on society by excessive car use has long been a tenet of effective transportation demand management. But while policy‐makers have striven to increase public transport subsidies, raise petrol taxes and introduce road‐user charging schemes to price the real costs of car travel properly, in most cases correcting the wider influences of the personal tax regime has begun only relatively recently. This paper is based on work undertaken for the Department of the Environment, Transport and the Regions, and the Inland Revenue of the UK government, which is currently working on addressing this very issue. In addition to reporting the British situation, the paper also uses a series of case studies to outline how this same process has been approached in the USA, Ireland, Germany, the Netherlands, Switzerland and Norway, and how successful they have been thus far with respect to transportation demand management objectives. It then draws conclusions about which direction policy‐makers should be aiming for in the future.

Acknowledgements

The research supporting this paper involved two projects sponsored by the EC’s Transport and Environment Directorate and the UK Government Department of the Environment, Transport and the Regions (now the Department for Transport). Grateful thanks are also extended to those interviewed over the course of this research.

Notes

1. Currency exchange rates for pre‐Euro currencies are converted into US dollars using 2001 conversion rates. Currently existing currencies are calculated using exchange rates cited in XE (2004).