Posted by Jonathan Maus (Publisher/Editor) on September 24th, 2020 at 12:31 pm
While most transportation-related revenue sources have been hit hard by the pandemic, there’s one seeing record highs.
In a meeting of the Oregon Legislature’s Joint Committee on Transportation Wednesday, Daniel Porter, the chief economist for the Oregon Department of Transportation, told lawmakers the agency estimates a hit of about $170 million to the State Highway Fund for the 2020-2021 fiscal year. The transit tax passed in 2017 has suffered an 8% downward swing compared to last year and the new tax on new cars and trucks is down 10%.
But the bicycle excise tax? It’s way up.
With the bike boom hitting local shops in a very real way, we were curious how the explosion in bike sales would be reflected in Department of Revenue (DOR) statistics. Now we know: Porter said there’s been a 56% increase in bike sales between April and June of 2020 when compared to the same period in 2019.
According to their records (based on collection receipts from retailers) there were 16,073 new bicycles sold in Oregon in in the second quarter of 2019. This year there were 24,997. That’s by far the most recorded new bike sales since the state began collecting the tax in April 2018.
“In May, June, and July, we couldn’t build bikes fast enough.”
— Brad Parker, Metropolis Cycles
At $15 per bike, the tax has generated $480,900 through the first half of this year — almost as much as they collected for all 12 months of 2018. When the tax was passed in 2017, analysts estimated it would raise about $1 million per year. Porter says overhead and administrative costs to collect the tax have stabilized at about $3,250 per month. That means the tax has deposited roughly $461,400 into the Oregon Community Paths program.
Metropolis Cycles owner Brad Parker is on the front lines of this huge sales growth. He said business was “crazy” from May to July. “We couldn’t build bikes fast enough… It was like, holy cow!” Parker said sales in July 2020 were up 40% over 2019, and it was nearly all new bikes (service and repair revenues have been flat). Luckily he pre-ordered enough bikes to keep his inventory stable so the shop could capitalize on the spike in interest.
As for the $15 tax, Parker said he and his customers have adjusted to it. With a thick stack of receipts on his desk, Parker expects his next payment (due at the end of the month) will be considerable. And now that it’s been a few years, he said customers have come to accept it. When they first explained the tax to customers, Parker said some would whip out their phones to see if they were making it up. But now, “I’d say only one out of 50 asks for a $15 discount, but you always have people asking for discounts.”
Overall, Parker is happy to be selling so many new bikes — especially because most of them are going to novice, first-time buyers or people who are just getting back into cycling after a long hiatus. And he’s looking forward to fall. “We stocked up on tons of fenders, because we sold tons of bikes without them,” he said.
— Jonathan Maus: (503) 706-8804, @jonathan_maus on Twitter and email@example.com
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