Commuter tax break: Boris Johnson says workers should buy season tickets BEFORE paying tax to save hundreds of pounds
- London Mayor in talks with Treasury over radical - but expensive - plan
- Workers would have the cost of a season ticket taken from gross pay
- Tax and national insurance would be deducted after, saving hundreds
- Government due to announce extra help with rail fares this week
Commuters would be given a tax break worth hundreds of pounds to cut the cost of season tickets under plans unveiled by Boris Johnson.
The London Mayor is urging the government to allow rail, bus and tube passengers to buy passes from pre-tax income, reducing the cost of getting to work.
He called on Chancellor George Osborne to back the idea, which would benefit commuters without helping foreign tourists or daytrippers.
Plea: London Mayor Boris Johnson is urging the Treasury to offer tax breaks for commuters to buy season tickets to cut the cost of getting to work
Ministers are expected to announce extra help to curb rises in rail fares this week, ahead of inflation-busting increases coming into force from January 1.
Some season tickets have risen by more than 80 per cent in the last decade, costing passengers thousands of pounds.
Last month Mr Osborne borrowed from supermarket slogans to declare ‘every penny counts’ as he signalled action to reduce energy and water bills, cut rents and limit rises in motoring costs and rail fares.
But Mr Johnson today warned against using the ‘hopelessly blunt instrument’ of limiting annual increases in ticket prices.
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He revealed he is in talks with the Chancellor over offering a tax break on commuters' bus and train fares.
Mr Johnson said: 'Employees should be allowed to pay for their season tickets from their pre-tax income.'
The idea, similar to the current system of childcare vouchers used by many working families, would see the cost of a season ticket deducted from pay packets before tax and national insurance is taken out.
A commuter buying a £784 annual bus pass would save £251 in tax and National Insurance, and their employer would save £108.
Travel: Chancellor George Osborne last week announced plans to freeze fuel duty for motorists but is planning to do more for rail passengers in the coming weeks
Mr Johnson believes there is a ‘compelling case’ for the plan to be applied across the country.
Mr Johnson said it would be ‘irresponsible’ not to raise fare income sufficiently to pay for the modernisation of London's ageing underground network and cope with a fast-rising population.
But a tax relief would target workers' travel costs while a ‘hopelessly blunt’ fare freeze would benefit tourists and casual passengers who did not ‘need or deserve’ help.
Mr Johnson: ‘Yes, there would be a cost to the Treasury - but then every year government spends huge sums trying to hold fares down.
‘This scheme strikes me as one George should consider further. You would allow continued investment in transport, and you would target your help at exactly the people who need it - not the millionaires and the tourists and the casual shoppers, but the hardworking people who are really turning the wheels of recovery,’ he wrote in the Telegraph.
Mr Johnson said 40 per cent of passengers travelled for nothing - and that there would be mayhem if any attempt was made to strip the ‘affluent bourgeoisie’ of old-age bus passes.
‘The result is that the entire burden of fare-paying is carried by the 60% - and that includes the people who make this country work, the people on low or moderate incomes who travel large distances every day and who to their places of employment and who have absolutely no choice in the matter.
‘It is time we did something specifically to help them, and that something is to give tax relief on travel.’
‘Employees should be allowed to pay for their season tickets from their pre-tax income.’
The Tories will seek to recast themselves as the friend of cash strapped voters this week when Transport Secretary Patrick McLoughlin announces plans on Wednesday to help hard-pressed train commuters.
His department has already announced plans to ensure that ticket pricing is fairer, with a single costing half of a double ticket and plans for new flexible season tickets for part-time workers.
Mr Johnson added: ‘If you have to use public transport morning and night, then you know that it can take a huge slice of your income.
‘Every autumn we face the same dilemma. If we follow the pleas of our officials, and raise fares - to cope with inflation and the cost of investing in our systems - then we are tightening the squeeze on people who have already seen their disposable income shrink over the last five years.
‘If we are irresponsible, on the other hand, and we fail to replenish the 'fare box', then we risk disaster.’
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