Transport represents almost a quarter of Europe's greenhouse gas emissions and is the main cause of air pollution in cities. The EU has committed itself to reducing transport sector greenhouse gas emissions by 60% in 2050, compared to 1990 levels – but it will not achieve this aim with current fiscal policies for transport in place.

To give an overview of national policies, ECF, the European Cyclists’ Federation, has developed a new interactive tool to be presented at a joint workshop with CONEBI, the European Bicycle industry association, at the European Cycling Summit in Salzburg.

The tool shows that fiscal incentives for cycling in European countries only reach a maximum of 15% of the tax subsidies for company cars. By comparing fiscal incentives for different modes of transport for an average commuter in 14 European countries, ECF’s new tool shows the substantial imbalance of national fiscal policies in the transport sector. In all countries, tax subsidies for company cars were much higher than any fiscal incentive for cycling, electric cycling, or even public transport.

Holger Haubold, ECF Fiscal Policy Officer states “Although a number of countries have introduced incentive schemes for cycling during the last years, we are still far away from a level playing field between transport modes. Driving to work in your own or your company’s car is way more attractive fiscally than using any sustainable mode of transport. For driving and cycling, the difference is like having to choose between a fancy seven course meal and a take-away pizza: It is easy to guess what most people go for.”

The price for this policy choice is high, as the OECD outlined in its 2014 report on company car taxation:

“In OECD countries, the environmental and other social costs were estimated at EUR 116 billion. This amount is significantly higher than the estimated tax expenditure (EUR 26.8 billion in 2012): the loss to society is thus far greater than the gain by a few ‘winners’”

EU taxation rules: zero VAT on e-cars but not on e-bikes?

Taxation rules in the field of VAT, that are currently under discussion at EU level, could be harmful for the promotion of all forms of sustainable mobility as well, by forcing Member States to apply standard VAT on EPACs, but not electric cars. They would establish an unfair treatment of EPACs compared to electric cars despite their obvious benefits in decarbonising the transport system, in fighting air pollution and congestion, and improving public health.

Manuel Marsilio, General Manager of CONEBI, assures: “CONEBI supports ECF in its valuable work of promoting the environmental, social and health benefits deriving from the use of Electrically Power Assisted Cycles. Moreover, it highlights that the EPAC Industry is providing thousands of jobs all over Europe and has invested millions of Euros in Research & Development activities with the aim of actively contributing to sustainable mobility”.

The new tool helps users to visualise fiscal policies for transport in a quick and easy manner – and highlights the need for fiscal reform. ECF and CONEBI call for Member States to address the huge imbalances in their tax policies, decrease harmful fiscal subsidies for e.g. company cars and increase tax incentives for sustainable mobility. At the EU level, ECF and CONEBI ask for an exemption of EPACs from the list that are subjected to standard VAT rates in the ongoing negotiations within the Council of the European Union.