Dear Tony: less VAT on bikes, please - BikeBiz

Dear Tony: less VAT on bikes, please

Three European cycle orgs are calling on Tony Blair, the UK prime minister, to reduce the value added tax on bicycles during the UK's presidency of the EU, which starts today.
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ETRA, COLIBI and COLIPED are to raise the matter of VAT reduction for all bicycle products and services with Tony Blair and chancellor of the Exchequer Gordon Brown.

"During their Presidency, Luxemburg has proposed a compromise for the harmonisation of the reduced VAT rate as well as for the extension of the experiment with a reduced VAT rate on labour-intensive services until 2015. The Council however failed to reach an agreement on that compromise proposal, said a statement from the three trade associations.

COLIBI is the Association of the European Bicycle Industry. COLIPED is the Association of the European Two-wheeler Parts' & Accessories' Industry. COLIBI and COLIPED represent more than 300 manufacturing companies in 13 European member states: Austria, Belgium, Czech Republic Denmark, Finland, France, Germany, Hungary, Italy, Portugal, Spain, The Netherlands, and the UK. ETRA is the European association for independent bicycle, moped and motorcycle retailers, representing 6000 companies, which employ 14 000+ people, throughout Europe.

Although the three trade associations are in favour of the extension of the experiment, which includes bicycle repairs, until 2015, they say they are convinced that all bicycle products and services belong in Annex H of the Sixth VAT Directive. That would allow member states to apply the reduced instead of the standard rate, and this not only to bicycle repairs, but also to the sales of bicycles, components, accessories and all bicycle services.

According to COLIBI, COLIPED and ETRA, this addition to Annex H is justified for "social and environmental reasons."

Bicycle businesses urge "people to use a bike rather than a car for short trips, which in term contributes to urban regeneration...and will be useful in combating climate change" said the three orgs.

"The loss of income for national treasuries caused by reducing the VAT rate would be amply compensated by numerous benefits. One example: the Dutch organisation Cycle to Work campaigns for people to use the bicycle instead of the car for commuting. In 2004, more than 22,200 people participated. All together, they travelled almost 12 million kilometres, thus avoiding some 2.37 tons of CO2 emissions.

"Following increased cycle usage motorised traffic will reduce, which in turn will result in a decrease of external costs caused by motorised traffic. Traffic safety will improve and as a result costs caused by traffic accidents will decrease. Public health will also improve, not only because people get more exercise but also as a result of less emissions. This will lead to less medical expenses. Following VAT reduction, the turnover in the bicycle business will increase. Therefore revenues from VAT and direct taxes will also go up."

COLIBI, COLIPED and ETRA believe that the application of the reduced VAT rate would be "conclusive proof of the fact that the European Union is actually doing something about the integration of environmental protection in fiscal policy. It would also give the initial impetus to recognising and sustaining for the first time and at European level the valuable role the bicycle can play in solving traffic and environmental problems."

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