TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, August 4, 2017

Oregon’s New Bicycle Excise Tax: Tax Policy Center And Tax Foundation Commentary

TaxVox, The Case of Oregon’s Bicycle Excise Tax:

Road trips are a staple of my family’s summer. We load up the van and head to the nearest state park, flash our Michigan Recreation Passport and off we go, hiking and biking. That “passport” is an annual $11 fee that we add to our license plate renewal payment. In exchange, we get unlimited access to all state parks, and the state uses the money, along with day-trippers’ fees, to maintain and improve the facilities.

Oregon, one of five states with no sales tax, just passed such a tax on bicycles to help fund trail maintenance and improvement. That decision generated a good bit of controversy, and as a bicycle-riding, trail-loving taxpayer, I wondered why a bicycle tax that supports bicycle trail use is so contentious.

Here are some details: Starting in October, Oregon will collect $15 on the purchase of every bicycle that retails for $200 or more. The state expects the excise tax to generate $1.2 million annually that will be used to “expand and improve commuter routes for non-motorized vehicles and pedestrians, including bicycle trails, footpaths and multi-use trails.”

Not every Oregonian is a fan. One bicycle retailer says the tax will take up to $15,000 off his bottom line each year. He’s not sure whether he’ll pass its cost on to his customers.

And some cycling advocates are steamed as well. Jonathan Maus, publisher of BikePortland, said, “We are taxing the healthiest, most inexpensive, most environmentally friendly, most efficient and most economically sustainable form of transportation ever devised by the human species.”

I share his concern, if not his affinity for hyperbole.

Would the excise tax result in less cycling? A general principle of economics says that if you want less of something, tax it. Will Oregon’s bicycle tax reduce the use of expensive two-wheelers? Maybe it will encourage the sale of bicycles costing $199 or less… or bikes without seats or pedals, which would be purchased separately.

Or, would the tax simply be a fee easily paid by cyclists—the prime users of bike trails? A public finance principle holds that if you can identify who uses public services and if you can collect a fee efficiently, charge those users that fee. Is $15 a fair price?

Which principle will hold true in Oregon? ...

Tax Foundation, Oregon’s New Bike Tax and the Future of Transportation Taxes:

Oregon’s new $5.3 billion transportation package includes an interesting wrinkle: a bicycle tax. Although it represents a minuscule share of the new revenues adopted under House Bill 2017, the $15 excise tax undeniably captured the attention of cycling enthusiasts in Oregon and elsewhere. It also inspired others, with a Colorado legislator floating the idea of a $15 a year tax, though a negative response was enough for him to lay on the brakes.

Oregon’s tax is an excise on the purchase of bicycles with a retail price of $200 or more and a wheel diameter of at least 26 inches—in other words, adult bikes, and not the inexpensive ones you might find in a big box store. The briefly floated Colorado tax proposal would have taken the form of a tangible personal property on a specific class of property, namely bicycles.

A bike tax is unusual—currently, only the city of Colorado Springs imposes a bike tax—but it plays into a larger debate about how states should navigate the taxation of preferred policy outcomes. Many advocates would like to see more people biking to work, just as many would like to see more people driving electric cars. So do you tax bicycles (and electric cars) or not? ...

http://taxprof.typepad.com/taxprof_blog/2017/08/oregons-new-bicycle-excise-tax-tax-policy-center-and-tax-foundation-commentary.html

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Comments

Perhaps because not everyone who owns or rides a bike uses those bicycle trails?
If some of these trails are also for pedestrians, why not tax shoes?

Posted by: ruralcounsel | Aug 4, 2017 4:05:00 AM

Wait! What happened to those who say taxes are what made our country great. Surely giving the government more money has to be a good thing, right?

Posted by: Dale Spradling | Aug 4, 2017 5:33:07 AM

As a Wendy's ad said, "parts is parts". Buy the frame, rims, tires, etc. separately. Here in The Columbus, Ohio area the govt is going nuts and spending mega bucks adding bike lanes to major streets for the benefit of a relatively small number of bike riders. Side effect is increased motor vehicle congestion.

Posted by: Jerome Schindler | Aug 5, 2017 8:40:45 AM

If this law is not overturned by the voters, it will result in pain across the board, including tolling interstate freeways, which is a real anathema to the West, and a thinly veiled new car sales tax, which is quite the anathema to Oregon. Oregon is a leader in bike infrastructure, and many motorists have wondered why the users aren't asked to chip in toward the cost of all the improvements. Some think that cyclists and bicycles should be licensed, and that cyclists should be required to carry insurance. This flat-dollar-amount sales tax is a tiny bone thrown to those redder elements.

Posted by: Jack Bogdanski | Aug 6, 2017 3:07:13 AM

As I see it, the problem with this tax is not that it is being levied, but that it is regressive. $15 is not going to dissuade the purchaser of a $3,000 bike, but for someone buying the department store Huffy so that they can get to work $15 might mean another week or month of relying on public transport. High end bike shops will likely get around this by selling saddles separately and this making their bikes not subject to the excise.

Posted by: Z K | Aug 7, 2017 5:58:15 AM