The end of the company bike?

Published on 2 October 2014 by Hilary Staples

The National Bike Scheme was introduced 20 years ago to encourage commuters out of their car and onto the bike. Now almost a quarter of Holland's 5 million commuters use the bike to get to work every day. Despite its obvious success, the government is stopping the scheme in 2015. Opponents say it's 'a stupid and short-sighted measure'.
The Dutch bike industry fears ending the National Bike Scheme will affect sales. Photo © Holland-Cycling.com

The Dutch bike industry fears ending the National Bike Scheme will affect sales. Photo © Holland-Cycling.com

What's the National Bike Scheme?

Stimulate employees to cycle to work by offering them a significant tax reduction for the purchase of a company bike, that's the idea behind the Dutch National Bike Scheme (Nationale Fietsplan). The scheme was introduced 20 years ago to encourage commuters out of their cars to reduce traffic congestion and pollution. Cycling to work every day also improves the health of the employees, thus saving on the costs for sick leave and healthcare.

So how does the scheme work? Basically employees can buy a bike out of their pre-tax salary, via their employer. This can save them up to 52% of the total price of the bike. The National Bike Scheme has been a great success. Now almost a quarter of Holland's 5 million commuters use the bike to get to work every day. In 2013, around 20% of the bikes sold was financed through the scheme. Despite protests, the government has decided to stop the popular scheme to stimulate cycling as of 1 January 2015. But does this mean the end of the company bike? Yes and no.

Stiff competition

From 2015 the separate schemes allowing tax reductions for different purposes - the National Bike Scheme was just one of them - will stop. Instead there will be one scheme allowing companies to offer their employees tax-free extras - it's up to them to decide what. This means the company bike has lost its special status and will be competing with a Christmas present for the employees, a staff outing and the latest tablet or smartphone. That's stiff competition! So in theory, there is still room for the company bike, but it all depends on whether individual companies consider it a priority.

Criticism

Opponents say ending the National Bike Scheme is 'a stupid and short-sighted measure'. Trade organisation Bovag is one of the many organisations that are against the new tax rules. According to their spokesperson, the government is being inconsistent. "How ridiculous is it to dump a scheme that has worked well for a long time? We agreed with State Secretary Mansveld [in 2011] that the number of commuters using the bike should increase by 5%, but a few governments later State Secretary Wiebes puts an end to that plan with one stroke of the pen."

Clearly, the bike industry isn't happy. Every year, around 200,000 new bikes are financed by the National Bike Scheme. They fear that the change in government policy will have a huge impact on sales. They're encouraging people to make use of the scheme before it's too late.

But it's not just the bike industry that's concerned. Dutch environmental organisation Milieudefensie doesn't believe the government cutbacks will actually save money. "It's making cutbacks without looking at the consequences. All the money that goes towards cycling, it gives huge returns in the form of less traffic congestion and less pollution. People also get exercise, which reduces the costs for healthcare."

Consequences

It's highly plausible that the change in tax rules will affect the sales of new bikes. But it remains to be seen whether the number of commuters by bike will drop as well. After all, Holland is a cycling nation with more bikes than inhabitants.

 
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