The Green Party has labelled the Government's proposed fringe benefit tax changes as "a huge Green win".
On Tuesday the Government accepted an amendment by Green Party transport spokesperson Julie Anne Genter to a taxation Bill, which would exempt bicycles, e-bikes, and scooters from fringe benefit tax (FBT) if used for commuting.
Genter says the changes mean that when an employer subsidises low-carbon transport for staff as a part of their salary package, they will not be taxed.
Over 400 people and organisations campaigned for the change and Genter said they've been pushing for it for years.
"After years of pressure from the Greens, the Government is finally stepping in to fix this. It is a long-overdue change that will help level the playing field between the different options people have for travelling to and from work," she said in a statement.
"It will finally rebalance the tax law to make it easier for people to access e-bikes for commuting to and from work, as well as public transport."
The FBT applies to goods and services when benefits are given to employees, such as a vehicle for personal use, or a low-interest loan.
Genter argued it had led to the "absurd situation" where businesses subsidise carbon-emitting transport for employees.
"Providing an employee with a free car park has effectively been subsidised by the Government, while providing an e-bike, for example, has been taxed."
Revenue Minister David Parker said the change will support New Zealand's shift to more sustainable transport options.
"As Environment Minister as well as Revenue Minister, it's great to see the tax system contribute to the Government's efforts to reduce emissions and increase the uptake of low-emissions vehicles," he said in a statement.
"The Bill currently being considered by the House already contains a proposal to exempt employer-subsidised public transport used by an employee to commute to and from work, and this amendment extends that measure."
The Bill includes a regulation-making power that would specify the maximum cost and the specifications of a vehicle to ensure the provision is not misused.