Has Belgium's mobility budget changed corporate driving?
Since 1 October last year, Belgium offers a legal framework for mobility budgets. How popular has the formula proved so far? We put three questions to Frank Van Gool (pictured), Director-General at Renta, the Belgian Vehicle Leasing and Rental Association.
Within the legal framework, Belgian employers can agree with their employees to offer them a personal budget equivalent to the TCO of their company car. This budget can then be used freely on a variety of mobility options (public transport, bikes, shared cars – and/or a greener car). The aim: to reduce congestion and pollution. Did it work?
First, let's take one step back. Mr Van Gool, is a mobility budget like the one recently launched in Belgium a good idea or a bad one?
“A good idea, because it answers a real need. For some company car beneficiaries, alternative forms of transportation are actually more efficient for their commutes and private travel needs, at least from time to time. Until now, these employees were 'locked in' to the use of their company car, the default advantage linked to their function – also because most transport alternatives an employer might offer on top of company cars was heavily taxed. Not only does the mobility budget offer a wider choice, it also adapts the taxation system towards Mobility as a Service.”
“However, we do think that it would have been better to make the mobility budget available to all employees, not just those entitled to a company car. Also, all motorcycles except electric ones are excluded, which is a missed opportunity. And it's virtually impossible to include an electric vehicle (EV) in a mobility budget, due to the high total cost of ownership of EVs.”
Do you think the mobility budget will change the way employees get around?
“We certainly believe there are plenty of people who either live close enough to work or have a good connection into work and who have limited travel needs of their own – plus another car in the household – who will choose a mobility budget without a car. These people will only use alternative travel solutions such as bikes, shared cars and public transport. At the end of the year, they'll get the balance paid out in cash. And meanwhile, they'll certainly help reduce the total number of car-miles, which is the way to reduce congestion and pollution.”
“Another group may use the mobility budget to opt for a smaller car than the one offered by their employer, and from time to time combine it with alternatives. Biking to work when the weather's nice, for example. Again, the balance will be paid in cash at the end of the year. While this particular option will improve employee satisfaction, it won't have a big impact on either congestion or pollution.”
“Recent studies show about 20% of employees with a company car would consider a mobility budget. Considering that the formula excludes independents and company directors – who together drive about a third of all company cars in Belgium – this means that less than 15% of the total company car drivers are considering it. And that's not saying they will decide for it, or that their employers would agree.”
Having said that, do you think the impact of the mobility budget on leasing companies will be limited too?
“Most leasing companies already offer a range of alternative mobility options, either via in-house cards and apps or via third parties. These tools for managing, reporting and billing the mobility alternatives will become more sophisticated in order to fit the needs of the mobility budget user. Also, customers who would like to use a mobility budget are in need of information, training and consultancy. We see leasing companies play a role here.”
“So far, the basic system of company car use remains untouched. Within the context of the mobility budget, there may be a movement to further downsize the range of eligible vehicle types, but we don't believe this will greatly affect the lease business itself. And as of January 1st 2020, we'll see minor changes to tax deductibility come into effect that will motivate drivers to buy or lease vehicles that have lower CO2 emissions.”