COLIBI, COLIPED and ETRA Ask UK Presidency for Lower VAT

GHAND, Belgium (July 13) - The UK is taking up the EU Presidency until the end of the year. As a result, ETRA, COLIBI and COLIPED (the European associations for Bike dealers and industry) have jointly raised the matter of VAT reduction for all bicycle products and services with UK Prime Minister 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. Although the three trade associations are in favour of the extension of the experiment, which includes bicycle repairs, until 2015, they are convinced that all bicycle products and services actually 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 fully justified for social and environmental reasons. They have argued this in a position paper, which was submitted to the Commission in March 2003. Since, the argumentation has been reiterated on several occasions to national finance ministers, MEPs and the Commission. In his speech addressed to the European Parliament on 23 June, Mr. Blair has referred to the Kok report, which shows the way to achieve a modernised social model in Europe. Among the elements he quoted from the report there was investment in active labour market policies, in urban regeneration and in help for small businesses. In their letter, COLIBI, COLIPED and ETRA have indicated that creating the possibility of a reduced VAT rate for all bicycle products and services equals an investment in those three elements. They also explained that bicycle businesses have labour-intensive activities. Moreover, they do convince people to use a bike rather than a car for short trips, which in term contributes to urban regeneration. Finally, the overall majority of bicycle businesses are small to very small, usually family businesses.