Time to remove VAT from Bikes

[timidtom]

The core problem is the principle of VAT itself of course, inflationary in nature and tending to be inflexible. In the days before VAT when we paid purchase tax, Chancellors placed products into tax bands according to their essentials or luxuries character, and flexibility was easy to apply for different users even within products, since that tax only appeared at the final consumer purchase stage.

I have to agree with both of you: the fault lies in the nature of VAT, which has no relation to the ability to pay and thus is a 'bad tax'.

Tom

 

[RoadieRoger]

I like your sentiments Bob , I originally bought a Batribike Folder for my Wife for exercise , but she won`t ride it .She still does the odd trip on her 33 year old Folder , something about having the E Bike stolen .I have ridden Cycles and Motorcycles all my life and at 73 still do , so it`s not a question of exercise for me . I have the choice of a Car and Powered Two-Wheelers and what goes to the Shops ? Why the Ebike of course . Not so much dressing up , easy to park and a pleasant experience . If they can give you a £5,000 cash incentive to buy a £30,000 car , why not £200 off a £1000 bike ? Apparently only 106 Owners received the £5000 handout between June and September despite funds for 8,600 cars being available to the end of March 2012 . As it looks like the Car Drivers aren`t interested , what about the Ebike Riders having some of that cash ?

 

[JuicyBike]

Burying The Car

Absolutely agree Roger. If the 20% was lost to the exchequer (short-term) the longer term gains would include:
Better health (greater resources for NHS);
More parking (time savings for those confined to cars);
Less Traffic (reduced road maintenance);
Reduced pollution (obviously);
Increased longevity for cars (a true obsessive compulsive will agree that immediately!).

I'm not proposing that bikes will ever replace cars. The shorter journeys completed more conveniently by bike replace the most fuel-inefficient and mechanically damaging heating-up and cooling-down cycles (sic) of those very expensive combustion engines...

When I was a kid I used to spend time with my Polish neighbour, a first rate engineer who worked for Jaguar and reserved himself the best components for his own Jaguar S-Type, one of the last to be made. He never drove it for journeys of less than 50 miles to avoid any undue ware. When he retired he took the car with him to South Africa, soaked the engine in Red-X and I believe the car was buried next to him...

 

[flecc]

If the 20% was lost to the exchequer (short-term) the longer term gains would include:
Better health (greater resources for NHS);
More parking (time savings for those confined to cars);
Less Traffic (reduced road maintenance);
Reduced pollution (obviously);
Increased longevity for cars (a true obsessive compulsive will agree that immediately!).

Surely doubtful at least. Would the reduction in price of the Juicy Sport from £749 to £624 bring a large increase in sales? No, the difference in price would hardly change anything, in exactly the same way that the £5000 subsidy on e-cars hasn't brought the hoped for sales.

These purchases, e-bikes or e-cars, are not just about money, they are about suitability, practicality, appeal, cost effectiveness in relation to gains. Only when everything one of those factors matches up does the final price come into it, and for Britain it doesn't work. This is not a cycling nation and the recent growth in commuting by bike is a forced gain through economic necessity. A return to better times will almost certainly be accompanied by a marked reduction in British cycling, repeating history. The investments in public transport, Crossrail, tube extensions, new buses etc will assist in that.

 

[JuicyBike]

I think removing VAT would change things, maybe more than just a little, in the right direction, and in the long term save the exchequer money. But as you say Tony, it's not just about money, it's about perceived value.

I'm always amazed at how convincing "Free" offers can be. People are influenced by the presentation of the deal: "VAT Free" does influence in the same way as "Duty Free" works at airports. Of course it's not a free offer - the exchequer (US) loose out, the individual gaining at the expense of those not taking up the offer.

From experience over the last 3 years selling many hundreds of electric bikes and scooters I do confirm sales are often made on price alone, and are influenced by notional values - "Congestion Charge Free" for instance can be one of many contributory deciders including "Zero Road Tax", "No Insurance" and even getting one over the local Traffic Warden! All tiny proportional costs but strongly influential for individuals.

The £5,000 subsidy on electric cars isn't proven to have been ineffective towards the few sales there have been. But that's irrelevant anyway. The way we apply VAT is an indicator of our values as a society and can be used to influence lifestyles.

Home insulation grants often incur greater costs due to the need for surveys, approvals and registrations of installers and product. But people are influenced by the "grant" given, even though it can be quicker and cheaper to simply get it done without any grant.

I think the most influential factor for the early bike sales this year will be the hike in the costs of Public Transport, currently way above inflation and way, way above wage inflation. Incidentally, Public Transport, whether provided by Richard Branson, Transport for London or Trent Buses is all VAT Zero rated...

 

[flecc]

Many of the things you mention Bob, congestion charge for example, reflect my contention that the current growth in cycling is largely due to economic factors. But I agree offers can be influential well beyond their actual value, though the main drift of my argument was the lack of inclination to cycle amongst Britons. I don't see any offer changing that, somewhat like the well publicised Marmite example. Those like me who dislike it won't buy it whatever the price.

There is a balancing factor though, people who don't like the idea of cycling often also hate public transport, so cycling can sometimes win out to a degree with them. That's often on a weather influenced part time basis that some in here practice, cycling in Summer, public transport in Winter.

When considering the effect of bike price reductions though, it's also necessary to see where new potential cyclists could be attracted from, so here's the last published London commuting proportions (DfT report 15/12/2011):

Public Transport all kinds: 978,000

Car: 70,000

Bicycle: 27,000

Clearly the main potential is from public transport, but as you've remarked, it's very expensive and getting ever dearer. And of course car commuting is even more expensive with most paying the congestion charge. This means that any cost for a bike within reason is financially hugely advantageous, and yet the numbers switching have been very small in proportion, it actually works out to 2.3% at best of the total of public transport and car users over an 8 year period. With such an immense financial advantage inducement already existing, I don't see offers or reductions doing anything really appreciable.

 

[lemmy]

and yet the numbers switching have been very small in proportion

The term commuter is very broad for London workers in that it might mean a journey of a couple of miles if you have the dosh to live in Kensington, say, or 9 miles if you live where I do through to 60 miles or more.

A large proportion of the more than 1 million people who do not cycle could never be induced to since they live out of cycling distance. I regularly cycle to town from my place but 9 miles each way, even on an e-bike is too much for a new cyclist. Cycling is widely believed to be dangerous, dirty and demanding with some truth and I don't see many more of that million willing to change unless they are utterly forced to choose between giving up their jobs, due to transport costs, or cycling.

But if they are that broke, the running costs of an e-bike will certailnly put them off. I doubt we will ever see more than double the number of commuter cyclist we have now and I further doubt that the proportion of e-bikers will greatly increase. I'd be happy to be proved wrong, I must say.

I shot a feature on London commuter cyclists in the summer and in 3 days of work photographing cyclist commuters never saw one on an e-bike. The growth area is in the single gear, narrow bar ultra-light machines or sit up-and-beg front basket types. The vast majority are on hybrids or drop bars, however.

Of the twenty or so cycle commuters I spoke to the furthest anyone commuted from was Thornton Heath, maybe 9 miles away but most seemed to ride from closer places like Clapham and Hammersmith. Twenty people is hardly a scientific sample, mind you.

 

[flecc]

The growth area is in the single gear, narrow bar ultra-light machines or sit up-and-beg front basket types. The vast majority are on hybrids or drop bars, however.

That exactly matches what I've seen, not e-bikes but these classes of normal bike.

Of the twenty or so cycle commuters I spoke to the furthest anyone commuted from was Thornton Heath, maybe 9 miles away but most seemed to ride from closer places like Clapham and Hammersmith.

I have a few commuting around 15 miles in from my area, and a tiny number from further out. One "maniac" I've met commutes from around 30 miles out including the long, steep Titsey Hill climb. Needless to say these are all lycra clad cycling enthusiasts.

 

[flecc]

Of course all our figures ignore two other growth areas, working from home and the many who have opted out, moving completely away from London. As all commuting costs rise, those are bound to grow more.

 

[avronb]

Us Brits look upon cycling as a liesure pursuit more than anything and thats where the e.cycle market must set its sights,also the weather,its been blowing a gale here for about two days with heavy rain,far from ideal for cycling.Bike sales will only ever reach the level at what they are now due to the two things i have just mentioned.

 

[lemmy]

Us Brits look upon cycling as a liesure pursuit more than anything

You may be right but speaking personally I have used bikes to get to school, do paper rounds as a kid and for general quick local transport all my life. I see it purely as a practical means of transport.

The great problem we British have with e-bikes is that attitude you so rightly point out. If a bicycle is a sporting thing or a keep fit thing, then an electric motor on it is an abomination. If it is just another means of transport, then an electric motor is one other way of moving on two wheels, a variation on the motor-cycle or the pushbike.

Not better or worse, just another mode of the same thing. Evangelists for electric bikes or for unpowered bikes are the same sort of people, really. We don't need evangelists, we just need people who see two wheels as normal viable transport in all its forms.

There can never have been a country with so many mountain bikes and so few mountains. It's so often 'cool' or image that overcomes common sense here. The fact is that so long as they do not become more powerful in speed terms, e-bikers have more in common with non powered bikers than separates them, it's just that many prefer not to see it.

Even reading my own post I can see that calls for reason are 'awesomely uncool, dude'

 

[Scimitar]

Tax evasions, including VAT avoidance, is one of the great banes currently facing our society. If we all want to benefit from a stable society (yes, I'm an outright socialist) then we need to pay our fair share - not look to exempt certain special interest groups from the burden.

I totally agree with all you say, but my problem is and always has been; why, when it comes to my turn to share the burden, do I really, really resent paying it?

 

[flecc]

I totally agree with all you say, but my problem is and always has been; why, when it comes to my turn to share the burden, do I really, really resent paying it?

It's the competitive streak that is a facet of the survival instinct. This drives us to seek an advantage in any situation. Altruism is not a natural animal attribute, not even for humans, we need to learn to practice it.

 

[jazper53]

I believe 20% VAT is one of main reason for negative growth, if you cut off the demand, then the supply will also vanish, and the whole economy will shrink into oblivion, What the use of these harsh remedies if its going to kill the patient.

 

[flecc]

if you cut off the demand, then the supply will also vanish, and the whole economy will shrink into oblivion

But in an economy where we import so much, cutting demand can be more helpful than harmful. E-bikes that aren't sold don't harm us, it helps us, those lost sales harm China and Germany.

 

[jazper53]

But in an economy where we import so much, cutting demand can be more helpful than harmful. E-bikes that aren't sold don't harm us, it helps us, those lost sales harm China and Germany.

Even what we import has benefits to the turnover, jobs etc, of the retail markets, as i sure the retailers of e-bikes from china can testify to.

 

[flecc]

Even what we import has benefits to the turnover, jobs etc, of the retail markets, as i sure the retailers of e-bikes from china can testify to.

It partly offsets the importing, but in total is still a net cost. It's what we export that counts of course, and our VAT level doesn't affect that.

 

[JuicyBike]

Altruism is not a natural animal attribute, not even for humans, we need to learn to practice it.

...and adjusting the vat rate is a way of teaching/imposing altruism...

 

[HD462]

I've read this thread from start to finish, lots of good points raised on both sides. A couple of things though that I'm surprised no-one has mentioned, first of all, if you want to save some money, like the car scrappage scheme, you can encourage your employer to start a Cycle To Work scheme. That's how I'm buying the Fast4ward Peak I've just got, and with the tax benefit saving it works out at about £670, and you get to pay weekly for it.

People mentioned the health benefits, reduction in pollution etc, and benefits to the Gov't (healthier people, lower NHS costs etc), however no-one has mentioned that using your bike means using your car less - loss if tax from the fuel you are no longer buying.

I'm a classic example, liked bikes all my life, but couldn't face the ride to work, boring, repetitive route, especially the return trip after a hard days work. Our company started a Cycle to Work Scheme, and I considered whether or not to get a bike for work. I'd often looked at eBikes over the years, but never took the plunge due to the price, but they fulfil my love of gadgets, and bikes.

The scheme offered a big saving, the more you spend, the more you save, so ideal chance to get one. The electric assistance would be a great boon for the return trip home too. So I ordered one.

In the three weeks I've had it I've only used my car twice, once the first week when I got up to go to work to see I had a puncture, and once because it was raining. I reckoned if I could save £10 a week on fuel it more than covers the cost of the bike, up to now it has.

So I'm getting some exercise I wouldn't have been getting, enjoying the ride now, and saving money on fuel. The exchequer however has lost money in the lost fuel duty and vat I would have paid on the fuel I haven't bought.

There are savings for the company too, as they claim back 13% on the national insurance they've have paid on your behalf, and can also claim back the vat on the bike if they're vat registered. So there are other ways of getting a cheaper bike than just the vat reduction.

PS: Just got soaked coming home from work tonight. ;(