Oregon’s new bike tax: $77,000 in receipts and $47,000 to collect them

Receipts from the first quarter for the $15 tax on new bicycles have been tallied by the Oregon Department of Revenue.

As of May 16th, the agency says they’ve processed about $77,000 in bike tax payments. The tax went into effect on January 1st and first quarter receipts were due April 30th.

The first reporting of figures from the tax came last week from Bicycle Retailer and Industry News. They reported a total of $34,065 in gross receipts; but that figure was a bit premature because DOR had only started collecting payments last month. After the BRAIN story broke we contacted DOR asking for an updated number and an estimate of administrative overhead costs.

DOR Communications Operations Manager Joy Krawczyk clarified to us that, “The amount provided to Bicycle Retailer & Industry News was from our monthly agency financial statement and reflected bicycle excise tax payments processed as of April 30, 2018. April 30 was the due date for the first quarter of payments and returns for the new tax, so any payments we received just before, on, or after the due date may not have been included in our April financial statement.”

Krawczyk also shared that as of March 31st, the agency had spent $47,000 to administer the tax — or about 61 percent of the total collected.

When the bike tax worked its way through the legislature in 2017 as part of the $5.3 billion “Keep Oregon Moving” transportation package, the State’s Legislative Revenue Office estimated it would raise $1.05 million and cost $50,000 per year to administer.

After the first quarter it appears the bike tax is nowhere near reaching those expectations.

Just as an example, let’s say receipts average $85,000 per quarter — as more shops report and new bicycle types become eligible for the tax mid-June — and administrative overhead decreases to $35,000 per quarter as the agency smooths out kinks associated with the new tax. That would leave us with around $332,000 in gross receipts (one-third the expected amount) minus $152,000 in administrative costs (three times the expected amount), and $180,000 in net revenue (less than one-fifth the expected amount).

Legislators have mandated that this revenue can only be used for projects outside the highway right-of-way like multi-use paths and trails similar to the I-205 or Springwater Corridor paths. If these current trends continue it appears the new bike tax would be a tiny pot that will have to be leveraged by other revenue sources and matching funds in order to build anything significant.

Hopefully the meager initial receipts reflect the slow part of the biking season. As sales pick up through summer (and don’t forget Christmas!), revenues from the bike tax are likely to rise.

Bike tax receipts for the second quarter (ends June 30th) are due July 31st. Stay tuned.

UPDATE: I asked Krawczyk if admin costs were higher because this is a new tax. Here’s how she responded:

“The initial costs to stand up a program are higher than the costs to administer it long-term due to initial system configuration costs and the additional staff time needed to assist taxpayers in understanding the requirements of the new tax program. We expect to start seeing a decrease and then stabilization in administrative costs starting around the 12-month mark, but this is dependent upon whether there are additional changes to the law and the impact of those changes on the administration of the tax.”

UPDATE 5/23: In a presentation to the Joint Committee on Transportation at the state capitol today, DOR Operations & Policy Analyst Xann Culver said 111 bicycle retailers have registered and 83 filed returns as of March 16th.

— Jonathan Maus: (503) 706-8804, @jonathan_maus on Twitter and jonathan@bikeportland.org

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