Halfords has today launched a PR campaign to urge the Government to reduce VAT on children’s bikes and accessories from 15 per cent to 5 per cent. Research conducted for the company by tns found that 97 percent of parents agree.
Halfords aims to win political support and to persuade the political parties to work at an EU level to reduce tax on children’s bikes, safety equipment and accessories to five per cent.
VAT law is governed by the European Union and set out in Directive 2006/112/EC. Annex III of the Directive provides a restrictive list of those goods and services for which a reduced rate, to a minimum of 5%, can be applied. In order to levy a reduced rate of VAT on children’s bicycles and equipment, Annex III would need to be amended by the Council (27 Member States), based on a proposal made by the European Commission.
David Wild, chief executive of Halfords, said:
“Figures show that the number of children cycling is lower than 10 years ago. We know that one of the reasons for this decline in cycling is the cost involved. Parents often have to buy their kids at least five different bicycles during their childhood and so the cost of cycling can really add up.”
Halfords believes that children’s bikes and all relevant equipment and accessories should attract the lowest possible rate of VAT, in line with other children’s products such as clothing, shoes and cycle helmets.
Halfords will be meeting with a number of senior politicians and policy advisors from each of the three political parties to win their backing and will present them with a dossier of facts and arguments.
Not everybody in the bike industry backs the Halfords stance. Speaking to BikeBiz, an industry source admitted that removing VAT would send out a strong message about the Government's seriousness in wanting to encourage cycling, but that reducing prices would not make much difference:
"My initial response is that removing VAT on kids bikes has to be a great idea to encourage kids to ride, but my experience suggests that the cost of kids bikes is not responsible for the decline in children’s cycling. Kid's bikes are really cheap for most families.
"I believe the real barriers are parents' perceived risk (often mis-judged) of danger on the road, and the danger of kids being mugged. This has led to the ‘bedroom culture’ of our current generation of children. They sit upstairs playing computer games and getting fat, but at least they are 'safe'.
"What would be more effective than a VAT cut would be using the money saved to invest in encouraging more kids to actually cycle and overcome some parents’ irrational fears."