Bicycle rental services are calling for a lower Vat rate in next month’s Budget and say the change is vital if they are to reach profitability.
Mobility Partnership Ireland (MPI), an industry group representing car and bicycle rental firms, told the Department of Finance that bike rental services in Ireland were running under “very lean profit margins” that put a squeeze on operations.
The organisation is calling for the minimal Vat rate for these services to offset the burden of overheads. Moby and Bleeper, two Irish bike rental start-ups, are MPI members.
“Operating costs like staff, insurance and the acquisition of new bikes are higher than in many European countries and they continue to rise, while customers expect a continuation of low prices,” the trade body said in its pre-budget submission.
“As a result all major Irish operators — both private and public — are currently facing losses.”
Commercial operators face greater challenges in this regard, it said, compared to public bike sharing schemes such as Dublinbikes operated by Dublin City Council.
“Urgent action is needed now to ensure that the ambitious start-ups and owner-operated small businesses that drive the Irish bike hire industry survive,” the organisation said.
The submission calls for the Vat rate to be reduced to as low as 5pc.
European Union rules on Vat for green initiatives would allow for such a reduction, MPI said.
The trade body pointed to Portugal where Vat rates on cycle rental services have been lowered to 6pc compared to our 13.5pc rate. “Acting as a clear signal of support to consumers, this will encourage the hire of bicycles and ensure continued low prices,” it said.
The organisation also suggests grants should be made available for electric bicycle charging infrastructure. It urged the department to provide grants for businesses to install ebike charging stations on their premises.
Such a scheme would be targeted at boosting ebike ownership as well as rentals by alleviating consumer wariness around charge range, the submission said. “Workplaces are key in providing this certainty by offering the necessary charging infrastructure to incentivise their employees and the wider public to use ebikes either via shared schemes or their own ebike,” MPI said.
The industry group, which also represents car rental and taxi app firms including GoCar and Free Now, also said: “While the Government’s budgetary focus was firmly placed on Covid-19, inflation and the cost-of living crisis in recent years, it is now time for concrete action to reduce our transport-related emissions.”
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