Employer subsidised commuter ticket

Project information

Index: 1129R4
Priority:2: Environment and risk prevention
Sub Theme:Energy and sustainable transport

Topic of the practice

Financing Public Transport

Good Practice Information

This is a good example of how to finance public transport. The GP has been adopted to increase the use of public transport on home-to-work journeys and other work-related journeys and to reduce congestion and all the other related external costs (e.g., air and noise pollution). The main tangible objective was to contribute to changing workers’ modal share in favour of public transport. The most important category to focus on was the commuters. For this reason, the mechanism of the ‘Employer subsidised commuter ticket’ was set up. It consists in a public transport ticket provided to an employee by the employer as a benefit; it is also useful for the employer as a tool for staff recruitment and retention.
The benefit for both the categories (employers and employees) comes from the fact that this ticket is a tax-free fringe benefit of up to €300 and the taxable value of the benefit is €300 if the share of the ticket paid by the employer is between €600 and 3 400 (since the employer can provide higher benefits or pay only a part of the ticket value). The ticket is intended mainly for home-work journeys, but it can also be used on leisure journeys so that it really offers a benefit.
To achieve this result, the taxation legislation has been modified implying an active role by the Finnish Government. The system works through travel vouchers that the employer buys from the transport operator and distributes to the employees; they can use the vouchers only to buy different tickets types according to their needs (single tickets, season tickets with eventual discounts, etc.). Fidelity discount mechanisms are foreseen for the employers.

Evidence of success

Original estimations by the Ministry of Transportation (2004) indicated the following balance for the operation: loss of taxation €6 000 000; increase in ticket revenue €3 000,000; social and environmental benefits €23 000 000. The calculations are based on a modal shift of 8 000-9 000 persons from private car to public transportation in the Helsinki Metropolitan Region. The environmental and social costs have been estimated using the stated modal shift and average emissions and accident statistics for different modes
According to a survey, of the first 2.000 users in the city of Tampere, 9% of the commuters previously used a private car for their trips. This means that the estimated modal shift obtained was 9% of the interested universe. It was expected that up to 9.000 private car users would shift to public transport in the Helsinki Metropolitan Region alone. In 2012 there were 1.300 employees offering the benefit and 65.000 employer-subsidised commuter ticket users, the majority of which were already public transport users. Nationwide there were 71.000 users in 2011, 208% more than the previous year.
Monitoring studies have revealed a high degree of satisfaction and interest among the employees and a trend by those who joined this initiative to adopt and promote other measures related to sustainable mobility.

Contact details to obtain further information on the practice

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