WRITTEN QUESTION E-2449/01

by Bart Staes (Verts/ALE) to the Commission

(11 September 2001)

Subject: Amending the sixth VAT Directive 77/388/EEC in the interests of the environment

Cycling is no panacea for the urgent environmental and mobility problems which exist, but it is at least part of the solution. Tax incentives are unquestionably an important instrument here. Accordingly, amendments to the sixth VAT Directive 77/388/EEC(1) are called for. Annex H to the directive lists the products in respect of which EU Member States may introduce VAT rates lower than the standard rate.

Despite a promising communication from its DG Taxation and Customs Union (Particular attention will be paid to [] the use of reduced VAT rates in Community policies (e.g. to help protect the environment [](2)), the Commission still has not taken any steps in this direction, although a trial has been organised with a view to job creation and reducing undeclared work (by means of Directive 1999/85/EC(3)).

In order to improve the internal logic and consistency of VAT policy in relation to environmental and mobility problems, it seems appropriate to amend the sixth VAT Directive 77/388/EEC with the aim of promoting cycling. All bicycle products and services, including new bicycles, should be added to Annex H.

Will the Commission act as proposed in its promising communication(4) and will it therefore extend Annex H of the sixth VAT Directive 77/388/EEC to include all bicycle products and services, including new bicycles, in order to encourage cycling in the European Union?

If not, why does the Commission refuse to extend Annex H of the sixth VAT Directive 77/388/EEC toinclude all bicycle products and services, including new bicycles, in view of its promising communication(5)?

(1) OJ L 145, 13.6.1977, p. 1.

(2) COM(2000) 348.

(3) OJ L 277, 28.10.1999, p. 34.

(4) COM(2000) 348.

(5) COM(2000) 348.

Answer given by Mr Bolkestein on behalf of the Commission

(29 October 2001)

In its new VAT Strategy(1) the Commission has indicated its intention to review the structure of the reduced VAT rate after the end of the three-year experiment on the application of a reduced VAT rate to certain labour intensive services. This experiment already includes a reduced rate for the service of repairing bicycles. At that time the Commission intends to carry out an overall examination of the rules for the taxation of both services and goods and to make appropriate proposals where it concedes that these are necessary to improve the functioning of the Internal Market.

The Commission can assure the Honourable Member that it will consider his suggestion when looking at the possibility of proposing amendments to the content of Annex H of the Sixth VAT Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes Common system of value addes tax: uniform basis of assessment(2), which determines the goods and services to which Member States may apply a reduced VAT rate. However, in the taxation field, decisions are taken by the Council of Finance Ministers acting unanimously.

(1) Communication from the Commission to the Council and the Parliament A strategy to improve the operation of the VAT within the context of the Internal Market (COM(2000) 348 final.

(2) OJ L 145, 13.6.1977. Directive as last amended by Directive 2001/41/EC (OJ L 22, 24.1.2001) corrigendum 2001/4/CE (OJ L 26, 27.1.2001).