Taxsaver annual tickets - how exactly is it a good deal?

HiberniaLG · 24-04-2019 12:36am #1

Looking up the Taxsaver scheme, an annual ticket for Dublin Bus - which I use to commute to work - would cost around €1400.

With a Leap Card, you can basically use Dublin Bus as often as you want for €28.50 a week - which, even if you used it intensively over all 52 weeks of the year, amounts to around €1482 per year.

In practice, I probably would not be hitting the spending cap on my leap card all 52 weeks in the year, so if anything, I'd probably be paying just under €1400 per year with just my leap card. So, on the face of those numbers, it doesn't seem as though Taxsaver would actually save me anything substantial on my commute.

I read somewhere that it saves money because it affects how much of my income gets taxed...but since my wage is a good bit below the cut-off for the higher rate of income tax (around €26000 per year), how much of an effect does it really have?

Apologies to those who are shaking their heads in bewilderment as to why I might be so spectacularly missing the point - understanding tax is something I need to work on.

Tomtom364 · 24-04-2019 12:49am

HiberniaLG wrote: »

Looking up the Taxsaver scheme, an annual ticket for Dublin Bus - which I use to commute to work - would cost around €1400.

With a Leap Card, you can basically use Dublin Bus as often as you want for €28.50 a week - which, even if you used it intensively over all 52 weeks of the year, amounts to around €1482 per year.

In practice, I probably would not be hitting the spending cap on my leap card all 52 weeks in the year, so if anything, I'd probably be paying just under €1400 per year with just my leap card. So, on the face of those numbers, it doesn't seem as though Taxsaver would actually save me anything substantial on my commute.

I read somewhere that it saves money because it affects how much of my income gets taxed...but since my wage is a good bit below the cut-off for the higher rate of income tax (around €26000 per year), how much of an effect does it really have?

Apologies to those who are shaking their heads in bewilderment as to why I might be so spectacularly missing the point - understanding tax is something I need to work on.

If I remember correctly you don't pay tax prsi or usc on the income you use to buy the ticket.
You will pay about €400 less tax and stuff

Losty Dublin · 24-04-2019 12:55am

https://www.taxsaver.ie/Ticket-Types/Annual-Tickets/Annual-Travelwide-Bus-Only/

Your ticket will cost you €400 a year less by way of your paying less Income Tax, and PRSI. Should your income increase and push you into paying at the higher rate of Income Tax, your saving will be €679 a year. Your annual pass also covers you on Nitelink, Airlink and Go Ahead city routes.

G_R · 24-04-2019 1:04am

It comes out of your pretax income, that's where the savings lie.

To put it very simply, if your salary is 26,000 and your tax saver ticket costs 1,400, you only pay tax on 24,600.

24-04-2019 2:09am

all of the above plus you never have to top it up or tag on or off and you can use the right queue for any bus journey

its mighty.

Jem72 · 24-04-2019 6:47am

The original poster has a point though. The discount on season tickets in Ireland is very small. It takes around 175 return journeys from stations like Longford or Mullingar to recover the gross price of an annual ticket. When you consider that relatively few people commute 5 days a week from such a distance, the discount for giving Irish Rail a whole year's money in advance is miniscule. At 20% more expensive, a monthly ticket is entirely pointless - you have to take 35 single journeys to break even.

Of course you get a substantial tax discount if you're lucky enough to be on the higher rate of tax but this is highly discriminatory against those on lower incomes. We must be one of the few countries where students pay more for their travel passes than people earning a good wage. I was a beneficiary of the TaxSaver system for many years but I always thought it was was quite unfair and represented a subsidy to the travel companies. At the very least there should be some way of getting the effective fare for students and the lower paid down to a similar level as that paid by the better off in society.

Xterminator · 24-04-2019 9:32am

its not discriminatory at all? IE it doesn't discriminate between your level of income or tax credits. It simply comes out of everyone's pretax salary the same way, that being the opposite of discriminatory?

i think you meant its more beneficial to those paying the higher rate of tax. Imagine that, the taxpayer getting something back for being a higher rate taxpayer, & shouldering a disproportionate % of the tax burden.

Its a ticket aimed at people who work. i think that's the point you miss.

Introduced by the Government in 1999, Taxsaver incentivises people to use public transport to and from work.

it means less 1 passenger car journeys as it aims to make the cost of commuting less than the cost of private transport, in conjunction with BIK changes to company car and parking allowances.

i thought it would be hard to find anyone against such an arrangement. my bad. :rolleyes:

magicbastarder · 24-04-2019 9:36am

the OP is correct in that the taxsaver option on the leap card (and on many other tax-efficient options such as the cycle to work scheme) is trax regressive. people with more income save more on it.

Jem72 · 24-04-2019 10:39am

I'm not accusing Irish Rail of being discriminatory - the fault is with the government.

Before Taxsaver was introduced season tickets were proportionally cheaper than they are now. I started using a TaxSaver in about 2004 when the gross ticket price meant you broke even on a little over three days a week without TaxSaver on my ticket. During the recession there was a distinct trend to push up the price of season tickets more than day returns as Irish Rail and the NTA recognised that the season ticket holder was less flexible than the occasional traveller.

This makes annual and monthly tickets impractical for certain categories of users - most notably students and the low-paid who effectively end up paying more out of their take-home pay for transport than those much better off than them. In addition, a lot of companies refuse to offer TaxSaver thus making travel more expensive for their employees.

So yes, I am against that part of the arrangement. It is quite simply unfair and discourages people from taking up low-paid work. It is also extremely unfair on students who are forced to commute extreme distances due to exorbitant Dublin rents and end up paying more for the privilege than the person in the seat next to them earning a six figure salary.

You could make the entire system much fairer by doing away with TaxSaver subsidy and adding it to the PSO money in return for reducing the price of all season tickets by 50% - or perhaps a little less to make it revenue neutral. That way everybody ends up paying the same and the transport companies get the same revenue.

namloc1980 · 24-04-2019 11:34am

Imagine the people paying the most tax getting a little bit more back for their troubles. The horror!

Xterminator · 24-04-2019 11:36am

This makes annual and monthly tickets impractical for certain categories of users - most notably students and the low-paid who effectively end up paying more out of their take-home pay for transport than those much better off than them.

but this supposes that those on higher incomes should pay even more than they already do, via PSO to subsidise the cost of say a students journey. The tax payer already does subsidize this journey, but you think the user should pay less of a share and taxpayers should pay more of the % of what the journey actually costs?

the public purse is not some infinite money machine. should we train less nurses, or raise the higher rate of tax etc to pay your higher subsidy? there are far more deserving causes than people who have a job on the lower rate of pay getting cheaper journeys etc.

Emme · 24-04-2019 12:08pm

Xterminator wrote: »

there are far more deserving causes than people who have a job on the lower rate of pay getting cheaper journeys etc.

A lot of those people would be better off on Jobseekers when you take into account travel costs, particularly if they have a long commute. Surely it is reasonable for these people to expect working to be worth their while financially.

Many rural towns have a disproportionally high unemployment rate. One reason is that factories, banks, shops etc. have closed there in the last few decades. Another reason is that the average cost of working for people who live in those places and have to work in Dublin is higher than for those who live in Dublin.

Few people choose to live in rural towns - they are forced to live there thanks to Dublin house prices. They spend a significantly higher proportion of their wages on commuting. Reasonably priced public transport would make a huge difference to these people as well as a free parking permit for train stations rather than having to fork out even more money for parking.

When you get to a certain distance from your workplace driving is cheaper than taking public transport such as the train but the ongoing M7 roadworks make driving even more stressful.

Taxsaver benefits those on the higher rate of tax most which is unfair because many people on low salaries who commute literally cannot make ends meet. They have to pay full whack for everything - doctors visits etc. No medical card or free dentist for them. In the winter trains are like fever hospitals with people coughing and spluttering - they can't afford to pay for a doctor's visit/prescription and can't afford to take time off work. Those on Jobseekers don't have to think about paying for a doctors visit or prescription.

magicbastarder · 24-04-2019 12:51pm

namloc1980 wrote: »

Imagine the people paying the most tax getting a little bit more back for their troubles. The horror!

paying tax is not like paying into a savings account, you know.

namloc1980 · 24-04-2019 12:57pm

magicbastarder wrote: »

paying tax is not like paying into a savings account, you know.

Did I say it was like a savings account? Sounds like you're a bit confused.

Riskymove · 24-04-2019 3:32pm

Emme wrote: »

Taxsaver benefits those on the higher rate of tax most which is unfair because many people on low salaries who commute literally cannot make ends meet.

People seem to not really get how this works

If the taxsaver ticket costs 1400 then the taxpayer gives up 1400 of their salary to pay for it

as a result they are paid 1400 less than they should be so over the course of the year they save some tax

at 1400 40% is 560 so they save 560 in tax over the year, or about €11 a week

at 1400 20% is 280 so they save €5.30 a week

L1011 · 24-04-2019 3:35pm

Riskymove wrote: »

People seem to not really get how this works

If the taxsaver ticket costs 1400 then the taxpayer gives up 1400 of their salary to pay for it

as a result they are paid 1400 less than they should be so over the course of the year they save some tax

at 1400 40% is 560 so they save 560 in tax over the year, or about €11 a week

at 1400 20% is 280 so they save €5.30 a week

I think they fully got how it works

Someone on a particularly low income may not even have enough tax paid to begin with and certainly no higher rate tax.

The Dublin area pre-tax fares are particularly bad value when compared to Leap capping, that higher rate tax payers pay vastly less doesn't cover everyone. Possibly Leap weekly capping is especially generous, possibly the annual pre-tax fares are too high.

n!ghtmancometh · 24-04-2019 9:00pm

Isn't there a week or two of free travel in December too? only had my DB taxsaver a year and distinctly remember the 28.00 not being deducted from my wages for a week or two last December.

G_R · 25-04-2019 8:30am

n!ghtmancometh wrote: »

Isn't there a week or two of free travel in December too? only had my DB taxsaver a year and distinctly remember the 28.00 not being deducted from my wages for a week or two last December.

Most employers don't spread the cost over the full year - mine does it over 10 months. So not a free period, you were paying marginally more the rest of the year to cover it.

L1011 · 25-04-2019 8:57am

The annual is 10x the price of a monthly (making the monthly tickets even worse value) and some employers charge the month price x10 with two months "off"

At one stage I was making a shorter commuter rail trip daily and found that leap was cheaper for me than monthlies - and moreso if I used other modes during the 7 day period and hit the multimode cap. This wasn't done often but enough that it was noticable

rgace · 25-04-2019 9:13am

magicbastarder wrote: »

paying tax is not like paying into a savings account, you know.

I always assumed that I paid tax to pay for public services and to subsidise those who are less well off.

pissedasanewt · 09-01-2020 9:41pm

The tax saver is good value, but not nearly as much as they advertise. I'm within the Dart / Rail short hop zone. So a single Leap card journey is
€2.40, so €4.80 return or €24 per week x 52 weeks in the year. Actually with holidays and bankholidays it works out at closer to 46 weeks, which is €1,104. The rail tax saver is €1450 (difference €306). I'm fortunate enough to be on the higher rate of tax, so i save €703 when buying the ticket.

So its not €703 cheaper to use the tax saver, it probably works out closer to €400 cheaper. Still, not to be sniffed at... but if you were on the lower rate of tax and were to use the ticket at weekends too, maybe its getting closer to being not worth while.

L1011 · 09-01-2020 11:51pm

They're really not great for short trips. I mentioned my short trip I was doing (Navan Road Parlkway to Docklands) and it was still cheaper to stick with Leap for me on higher rate at that time. The ticket prices have changed since - up for the single fare and down 100 for the annual rail ticket - so it may be a wash now but I doubt its a saving.

tara83 · 09-01-2020 11:54pm

Don’t forget some people don’t use it solely for commuting and would have additional usage as weekends etc

Dodge · 10-01-2020 12:47am

Weird arguments being made here. There’s literally hundreds of ticket options so of course some save more than others

Do your own sums on what you spend on travel, use the calculator on the tax saver website, and see if you save money.

If it does, great. If it doesn’t, continue on with the PAYG or however you pay. Should be no drama here

Taxsaver annual tickets - how exactly is it a good deal?

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