In BikeBiz2 we mentioned the possibility of lower VAT rates for cycle repairs. However the UK government wont be taking up this option, saying its already doing its best to create jobs.
Its a strange decision because the money saved would have probably been passed on to consumers by most IBDs and this could have been seen as action against what the government refers to as rip off Britain, echoing newspaper headlines from last year.
The lower VAT rate option has just been agreed to by the EU Council of Ministers and allows Member States to charge lower VAT rates on cycle repairs and other services (such as hairdressing).
The VAT of 5 percent , from the New Year to December 2002, was always going to be an experimental measure but the government dismissed it out of hand.
A government spokeswoman said: We don't necessarily agree that something like this will boost employment. The UK already has the second highest VAT threshold in the EU."
But she added that Whitehall would keep an open mind and
would keep the option under review.