Bike Commuting Tax Incentive

What is it?

Financial incentives provided by local governments to encourage citizens to ride bikes when commuting or simply using them as a regular mode of transportation. Through Mobile Crowdsensing Platforms, for instance, each kilometer cycled during peak hours is tracked and converted into money or tax credits for the commuters. In order to create a behavior habit, the reward could be permanent or issued during a certain period of adaptation as car drivers shift to bikes.

With the boom of bike-sharing platforms (for more information about sharing systems, we highly recommend reading the Sharing Economy editorial piece), another possible method of financial incentive consists of governments and employers allowing citizens to eliminate the monthly cost of a bike-share membership, for instance. A range of tax breaks aimed at commuters could also include a monthly allowance for cycling expenses. Some other kinds of cycling incentives include benefits for employees to get discounted bikes or equipment through their employers.

As an effort to create better-balanced mobility, fiscal regimes and incentives can be adapted depending on the government's goals. If authorities want the employers to engage in a zero-emissions oriented perspective, they could allow companies to benefit from employees cycling to work as well, such as reducing employers' taxes submitted to governments.

Bike-friendly: Benefits

The creation of financial incentives does not necessarily mean it will encourage people to bike. There many forces that can prevent people from cycling. In the first place, most urban infrastructures worldwide are not bike-friendly, which puts bikers at substantial threat in the face of reckless driver behavior or poorly designed urban infrastructure oriented mostly on car traffic.

Also, the continued growth in cycling deaths in countries such as the U.S., either by not counting with protected bike lanes or cycling trails, jeopardizes the likelihood of people shifting from car commuting to the bike. In addition, companies such as Uber plays a vital role in decreasing the flow of bike-commuting as the availability of last-mile car transit appears to be more convenient than cycling throughout the city.

This means that together with financial incentives to promote bike traffic, for urban environments to become truly bike-friendly, a considerable investment must be done in terms of infrastructure and policymaking. Cities such as Copenhagen, for example, embarked on a progressive mission to change both the city's infrastructure and its inhabitants' response to urban traffic until finally reaching a point that bikes outnumbers cars by more than five-to-one. In 2016, there was an increase of 22% more kilometers covered by cyclists than in 2006, with 62% of people living and working in Copenhagen commute on a bike.

Challenges & Opportunities

Nevertheless, this was not done by itself. Bike journeys gained popularity because the sense of safety while riding was supported by bike-inclusive infrastructure initiatives, including bridges, additional bike lanes, and a whole network of cycling superhighways. The city council now wants to increase the adoption of cycling by investing in new measures to become a carbon-neutral city by 2025. In addition, the benefits of spending resources in promoting bike commuting also provides considerable outcomes related to health, such as decreasing stress levels in traffic congestions, as well as economic gains like reducing household expenses on public transportation or personal vehicle maintenance.

Alongside infrastructure remodeling, the implementation of bike commuting tax incentives also need the support of transportation services. For example, according to CIVITAS 2020 report, in the Netherlands, 47% of all journeys to a train station are taken by bike. This research shows that while investing in cycling infrastructure, other transportation modes are expected to benefit from it. In order to combine the use of bicycles with public transport modes, it is necessary to invest in proper physical installations designed to accommodate both bikers and the bikes themselves in safe and comfortable ways.

The integration of a Multimodal Transportation Ticketing system could also help city authorities gather knowledge and data about cycling while also linking to the system additional financial incentives for those who take public transport and bike altogether. This technology method could ease one of the main obstacles faced by city authorities, which is the lack of quality data linked to bikers' daily habits and routines. In fact, unlike many European cities that are suitable for cycling, most worldwide city ecosystems were built following car needs. Many infrastructure implementations (e.g., new highways, bridges, or bike lanes) would be near to almost impossible to achieve in cities such as Dallas, Miami, New York, or São Paulo, where car traffic is prioritized. Nevertheless, Multimodal Transportation Ticketing could boost finance incentives for cycling, but also gather insights to define how multimodal traffic models could combine cycling with existing urban infrastructure to develop novel cycling plans.