Mobility Partnership Ireland (MPI), which represents businesses such as bike-share company Bleeper, GoCar and Aircoach, has said extending the tax relief would help to take private cars off the road.

The current tax saver scheme reduces the cost of using public transport for commuters, but MPI has written to the Department of Transport asking for it to be expanded to other modes of transport, including bike share, e-scooters, car-share and car rental, and taxis.

The organisation said this would give commuters greater flexibility, and incentivise more sustainable travel.

The proposal is to include a digital travel account in the State’s TaxSaver scheme. An employee would be able to assign up to €100 per month tax-free through their salary to this digital travel account. They could then pay for Leap Card top-ups, shared bikes, e-scooters and car shares and taxis.

MPI has said the proposal would benefit people living in rural areas, who often miss out on transport options included in the scheme because there are fewer public services available.

Hugh Cooney, chair of MPI and founder of bike share company Bleeper, said just 25,000 commuters are using the current tax scheme. He believes the proposal would benefit more people across a greater spread of the country.

“Ireland needs to encourage more commuters onto sustainable transport. The TaxSaver scheme should offer a incentive to achieve this, but only about 25,000 commuters are participating,” Mr Cooney said.

“Unlike the current set-price TaxSaver ticket model, MPI’s proposal for a digital sustainable TaxSaver Account would provide a flexible, pay-as-you-go approach covering a much wider range of transport options, benefitting more commuters in more counties.”

Last month, the Department of Finance’s Tax Strategy Group published papers outlining a list of options to be considered as part of the budgetary process, including the treatment of Vat on bicycles and e-bikes.

According to the group, “a number of representations” were received in relation to reducing the Vat rate for bicycles and e-bikes, to which the standard rate of 23pc currently applies. Reducing the Vat rate to 13.5pc would cost the exchequer €8m, the report said.

However, the group said it was not possible for a lower Vat rate to apply to a subset of bikes, such as e-bikes or cargo bikes. It also pointed out that a reduction in the rate might not be passed to the consumer, “because there is no obligation for a retailer to do so”.