Opinion
When Tax Issue Triggers Controversy over Bicycle Regulation Discourse

Rama Ames Remonda, Monday, 27 July 2020

When Tax Issue Triggers Controversy over Bicycle Regulation Discourse

A state official’s slip of tongue becomes a controversy, again. This time, it is about the discourse on the regulations of cycling activities that address the issue of tax imposition. After the news went viral and polemic sparked, as usual, it was denied by a government spokesperson. 

The point of the rebuttal is that it is not true that the Ministry of Transportation is preparing regulations related to bicycle tax. The promise is that the regulations being prepared are to support the safety of cyclists in the midst of the booming of bicycle use as a means of transportation by the public.  

For the two-wheeled pedal cyclists, don’t lose your temper. Indonesia is not going back in time to colonial era, at which the Dutch and Japanese colonizers taxed bicycles during the 1950s to 1970s. Quoting Tirto.id, the natives at that time named the bicycle tax as "peneng", which was a pun of Dutch language, penning or a contribution. Its application is like a motor vehicle ticket in this era. But, I am not saying vehicle ticket is a colonial heritage. 

One thing is for sure, bicycle seems to be timeless. In the middle of the widely-used high-tech motor vehicles, bicycles are still used to go for a pedal on the city roads and rural streets. In fact, the enthusiasm towards bicycles is increasingly high and its users come from across generations and economic circles. In the past, a typical bike was onthel, the simple and classic bicycle, but now what comes in the minds of modern society is expensive bicycle brand such as Brompton or at least Polygon. The prices vary, from the cheap to the expensive ones. So does the reason for going cycling, from those who really like to go for a pedal to those who are just following the hype. Apart from all those things, cycling gives more health benefits than its disadvantages.  

Especially in the middle of the 2019 Corona Virus Disease (Covid-19) pandemic, the mobility of using bicycles is becoming increasingly relevant amidst the campaign for social distancing, especially for some people who consider staying at home is not the only solution for health, economic or social problems at the moment. For them, humans must keep moving and be productive in order to keep physically fit and healthy, while ensuring their economic and social needs are met amid a pandemic and crisis. Mobility and transportation then become issues, should it be banned, restricted or even freed? 

Rather than just waiting for a solution that is yet to be found, a bicycle is an alternative mode of transportation—amid a greater risk of exposure to Covid-19 when using public transportation. Bicycle sales show the increasing interest of the public in riding bike at the time of the pandemic—despite the fact that the cycling lifestyle has increased in recent years. It is also in line with the world society’s awareness of the importance of health and the danger of global emission. 

That is why I could not understand, what was in the official's mind when mixing the regulations on cycling and taxes? At first, I thought, perhaps it is because they saw an enormous profit potential from the surge in bike sales. Or, maybe because it was inspired by the taxation approach related to cycling policy in a number of European countries such as Belgium, Luxembourg, France, and Italy. But that is not the case. Instead, these countries provide tax relief incentives (subsidies)—not disincentives (taxing). Those countries are aware that public health and environmental sustainability are more important than merely collecting maximum incomes. 

Reflecting on Europe 

The European Cyclist's Federation (ECF) on its website, outlines Belgium since 1999 introduced a tax relief scheme for workers who bike from homes to their offices and vice versa. The amount of the incentive is measured based on the kilometer distance traveled. Each employee can calculate the cost of cycling as a deduction from taxable income of €23 per kilometer.  

Furthermore, quoting Forbes, the Belgian government also cut the Value Added Tax (VAT) rate on bicycle sales, from 21% to 6% in the mid-2019, to improve the public health and reduce traffic jam. 

ECF recorded in 2015, more than 400 thousand inhabitants or 9% of Belgium's total workforce benefited from reimbursement of cycling costs that were converted into a tax relief. On the other hand, tax revenue from motor vehicle users is reduced by around 2% in a year, equivalent to €93 million. From the assumption, ECF estimates that Belgian bike to work community has cycled over 420 million kilometers or nearly three times the distance between earth and sun. The mass action creates important benefits for public health, as well as contributes to reducing CO2 emissions and improve Belgian air quality. 

Belgian pro-cyclist policy also spreads to neighboring countries. Luxembourg, for example, carried out fiscal reforms to introduce tax incentives for cycling. The amount is quite large. Taxpayers can get a reduction in income tax of up to €300 for every new bicycle purchase. Companies are also encouraged to provide bicycles to employees for business or personal purposes, whose employee users are completely exempted from taxes. In contrast, car users in Luxembourg must be willing to spend more to pay taxes on the 'benefits in the form of goods' obtained from driving or parking their vehicles. 

In 2017, France also introduced a kilometric replacement scheme similar to that of Belgian model. Electric pedal bicycles (pedelec) and e-bikes are also included in this scheme. This kilometric allowance is given to every citizen who bikes to work, in the form of a reduction in taxable income of €0.25 per kilometer to a maximum of €200 a year. For business actors, who provide free bicycles to employees, are entitled to a tax exemption of up to 25% of the acquisition and maintenance costs of the bicycles used. In addition, France also provided a nationwide subsidy of €200 for every purchase of electric bicycle. 

Due to the Covid-19 pandemic, the French government even increased the allocation of €20-50 million in cycling subsidies to reimburse repairs and fund basic bicycle training and parking. French citizens will not accept cash, but registered mechanics who provide free bicycle maintenance services up to €50 can claim it to the country. 

Moved to Italy, in large cities with a population of at least 50 thousand people, each new bicycle buyer is given an incentive of up to €500 from the government. This subsidy is part of a €55 billion stimulus package for economic recovery and encouraging social distancing after the lockdown in the country known for its pizza. This subsidy also includes purchases of pedelec and electric scooter. 

Bicycle Incentive Policies in Europe  

  Bicycle Incentive Policies in Europe
Austria Company's bicycle is not counted as employee’s tax object. 

Belgium

 

 

  • €0.22/km allowance is provided for voluntary cyclists;
  • Company's bicycle is not counted as employee’s tax object; and
  • The company can calculate all VAT and 120% of the cost of providing bicycles and its supporting installations as a deduction from gross income. 
Denmark    Employers can calculate the VAT and the cost of providing bicycles as a deduction from gross income. 
France   This country provides compensation for subscribing to a public bicycle sharing system. 
Germany A tax relief is given for companies that provide bicycles for employees or businesses. Only 12% of the price/cost is calculated as taxable benefits. 
Italy New bicycle buyer is given incentives up to €500. 
Sweden      The company's bicycle is designated as a tax object, but still can be profitable in fiscal terms. 
Switzerland         Bicycle from a company is not counted as employee’s tax object. 
The Netherlands 
                  
Bicycle is categorized as a vehicle that is eligible for general allowance (since 2015). The provision of tax free bicycle is up to €749 every three years. 
The United Kingdom    The tax exemption is provided for bicycles that the employer lends to employees for biking to work. 
  (Source: European Cyclist’s Federation and various sources, processed)

Similar incentive policies are also applied in European countries that are aware of the dangers of exhaust emissions, such as Austria, Denmark, the Netherlands, and the United Kingdom. How about in Indonesia?  Instead of giving incentives as a form of gratitude to bicycle users, what is often discussed is the opposite. Hopefully, it is just the official's tongue that slipped, not the policy. 

For sure, I am as a citizen—who is only planning to do cycling—would think a thousand times to travel around the archipelago by bike. Why? Not only that it is far, it (policy maker) also tired me out, because we have been weary before even starting anything. Especially in the middle of confusing regional quarantine, it is better to lay down while watching the movie "How Funny (This Country) Is ". 

**) Short version of this article has been published on Jawapos.com, 20 July 2020

 

 
 



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