Through three quarters of its first year in existence, Oregon’s $15 bicycle excise tax has added $489,000 into state coffers. That’s a lot lower than state economists expected. Overhead costs are also more than expected and are likely to climb even higher as officials beef up filing enforcement efforts.
As OPB reported last week, officials from the Department of Revenue, Oregon Department of Transportation and the Legislative Revenue Office have been updating lawmakers on receipts from the slew of new taxes and fees included in the $5.3 billion transportation package passed in 2017. Among them was the infamous $15 tax that applies to every new bicycle valued at $200 or higher sold in Oregon.
The tax was pitched as a way to force bicycle riders to have some “skin in the game” when it comes to funding transportation infrastructure. It was seen by advocates (The Street Trust opposed the fee but supported the package it was integral to) as a part of the compromise needed to pass a bill with funding for Safe Routes to School and public transit, while raising fees and taxes on motor vehicle use. The tax was also seen as a way to answer some voters who — despite it being terrible and ineffective — have long dreamed of making “cyclists pay their way.”
We’ve railed against the bike tax from a policy perspective in the past. Why on earth would Oregon want to tax a form of transportation that adds such tremendous value to our roads and lives? Given cycling’s return-on-investment, it makes more sense to pay people to ride them than to tack on a clumsy tax.
Now it turns out the bike tax isn’t an efficient revenue tool either.
Back in September, an official from the Department of Revenue told members of the House Committee on Transportation that the bike tax had raised just $289,000 through its first six months. Of that, only $133,000 had been transferred to ODOT’s Connect Oregon grant program where it will be earmarked for path and trail projects outside of the highway right-of-way. (Yes, that’s right, the way the law was written, the money can’t be used for on-street bikeways.)
“At this point it’s pretty labor intensive.”
— Xann Culver, Oregon Department of Revenue on their efforts to collect the bike tax
Now state officials estimate the bike tax will likely bring in about $900,000 in its first two years. That’s less than half of the $2.1 million they told lawmakers it would bring in every two years. At another committee meeting last week, officials released a chart showing that future year estimates will be even lower. Instead of $2.8 million every biennium, they now expect just $1.1 million. And that’s before subtracting administrative costs. ODOT Economist Daniel Porter told lawmakers that in hindsight, their estimates for the bike tax were, “A real shot in the dark.” He blamed Oregon’s lack of sales tax data and a misunderstanding of the “seasonalities” of new bike sales.
Back in September, Department of Revenue staffer Xann Culver said they had less than 100 retailers filing the tax. Joint Committee on Transportation Co-Chair Caddy McKeown (D-Coos Bay) commented that the number of retailers seemed low. “Was there some sort of plan to increase that number to make sure everybody is paying their fair share?” she asked. “Yes,” the DOR staffer replied. She then explained how they plan to bump up filing enforcement efforts do more research on their list of 350 bicycle retailers to see which ones are selling taxable bicycles, and follow-up on tips from retailers about others shops who aren’t filing. The state also plans to hire an additional auditor in the coming months to “do more enforcement.” “At this point,” Culver said, “It’s pretty labor intensive.”
So, while the estimated revenue from the tax goes down, it appears as though the amount it takes to collect it will be going up.
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