Oregon’s New Bike Tax and the Future of Transportation Taxes
July 24, 2017
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?
A lot depends on why you think the taxes exist in the first place.
Revenue is a big part of it, of course, but if a secondary priority is to get people out of standard vehicles and into electric cars or onto a bicycle, then one might favor substantial tax preferences for those other modes of transportation. On the other hand, one might just as well conceptualize these taxes as paying for the roads (or bike paths) used and the wear-and-tear of traffic, and perhaps to help “price” contributions to congestion. In that case, the preferences make less sense.
A Chevy Volt contributes road wear-and-tear just as much as a Malibu does. A Nissan Leaf’s contribution to congestion is no less than an Altima’s. One policy goal of transportation taxes might be to reduce emissions, which could argue for differential taxation of standard cars, electric cars, and bicycles. Another policy goal might be to approximate a user-pays system, where those getting the benefit of the roads (or bike paths) contribute toward their maintenance costs. If, someday, we’re all driving electric cars, that may be better for the environment, but it won’t obviate the need to find some way to pay for roads and bridges. If people get out of their cars and onto the bike paths, that might be beneficial to cities, but the bike paths don’t pay for themselves.
But whereas a gas tax does a fairly good job of approximating road usage, a flat $15 excise on bicycle sales, or an annual property tax or licensure fee on bicycle ownership, would apply equally whether one commutes by bike every day or the bike never leaves your garage.
The Colorado proposal isn’t going anywhere, so for the immediate future, Oregon will stand alone in imposing a bike tax. In the long run, though, states may yet shift gears on transportation taxes. Some states have contemplated, or even run pilot programs for, taxes on vehicle miles traveled rather than motor fuel purchased, a policy that has raised privacy concerns. Occasionally, as here, legislators even contemplate levying a tax on bicycles. As the ways Americans travel change, there will be increasing pressure for the tax code to change as well. In the process, legislators must grapple with that difficult question: do you prioritize a user-pays system, or one that incentivizes a more rapid shift to favored modes of transportation? And if the latter, how do you choose to fund transportation once the desired transition occurs?
Portland, Oregon, has one of the strongest cycling cultures in the country, and more than 7 percent of Portlanders commute by bike, the highest rate of any U.S. city. To some, this fact only contributes to the urgency of bringing a significant number of commuters back into the tax code. To others, a bike tax is an impediment to a continued shift to cycling. Oregon’s balancing act won’t be the last.