WRITTEN QUESTION E-2005/03

by Jan Dhaene (Verts/ALE) to the Commission

(16 June 2003)

Subject: Fiscal incentives and quality standards to promote road safety and the cycle and cycle repair trade

Cycles and cycle spare parts sold in the European Union have so far not be required to meet quality and safety standards; nor do consumers have any way of knowing the quality of the equipment they buy. This has far-reaching implications in terms of safety.

In an initial evaluation of the three-year experiment of lower VAT rates for labour-intensive services (including renovation work and cycle repairs), the European Commission concludes that the measure has had no demonstrably beneficial effect on employment. The evaluation report for Belgium, however, says that the lower VAT rate has achieved its objective. Various experts also doubt whether the period of three years is sufficient to make cyclically-insensitive evaluations.

It is possible that this experiment may be ended on the basis of the negative evaluation. Nonetheless, in its Transport White Paper: 2010, the Commission itself emphasises the importance of cycles in urban environments.

I therefore have the following questions to put to the Commission:

- what is the Commission's specific evaluation for the cycle repair sector?

- does the Commission intend to respond to the negative assessment of this experiment by abolishing the lower VAT rate for cycle repairs?

- has the Commission an overview of the impact of badly maintained cycles on road safety and safe cycling?

- does the Commission intend to introduce quality standards for cycles and cycle parts, together with a quality label that is clearly recognisable for consumers?

Answer given by Mr Bolkestein on behalf of the Commission

(25 July 2003)

Three Member States (Belgium, Luxembourg and the Netherlands) have applied a reduced rate to cycle repairs under the experiment of lower VAT rates for labour-intensive services. An examination of the

reports of the Member States has revealed that a significant number of firms did not apply the reduced rate as foreseen by the legislation. These firms considered that the arrangements for implementing the measure were too complex. It was also one of the sectors where the incidence of the fall in VAT rates on prices was most limited. The Commission's comprehensive evaluation report may be found at the following address: http://europa.eu.int/comm/taxation_customs/taxation/labour_intensive/labour_intensive_fr.htm

Rapport

The Commission intends to present a proposal for a directive on reduced VAT rates by the summer of 2003. The main aim of this proposal will be to improve the functioning of the internal market by rationalising Member States' use of reduced rates in order to avoid potential distortions of competition by giving Member States equal opportunities to apply reduced rates.

The proposal will take into account the results of the experiment of lower VAT rates for labour-intensive services.

The Commission is fully aware of the impact that badly maintained cycles can have on road safety and safe cycling. However, it needs to examine carefully whether a reduction in VAT rates is an appropriate way of resolving the problem.

The Commission does not intend to introduce quality standards or a quality label for cycles.