New Tax on Bike Sales in Oregon Has New Zealand Cyclists Talking

New legislation in the US has stirred conversation amongst bike enthusiasts here in New Zealand.

On the 6th of July, the Oregon Legislature approved a $5.3 billion transportation tax and fee package. House Bill 2017, which passed the Senate 22-7, includes a 4-cent gas tax increase, a $16 vehicle registration fee climb, 0.1% payroll tax and 0.5% tax on new car sales.

But the clause that really stirred the bike-friendly state was the introduction of a tax that doesn’t exist anywhere else in the US – a tax on the sale of bikes. Unless people contest it at the ballot or in court, starting 1st January 2018 all bicycles sold in the state will have a flat rate tax of $15. The excise tax was originally proposed to be a 4-5% tax but is now sitting at 3%.

This means that all new bicycles with a wheel diameter of 16 inches or more and a retail price of $200 or more will be taxed an extra 3%. Retailers will become tax collectors and will be required to keep receipts and records pertaining to the collection of the tax for a minimum of 5 years. They will also be required to file quarterly returns with the US Department of Revenue.

It must be remembered that most states in the US do not tax the sale of bikes because a sales tax exists and they tax the sale of most goods. Oregon does not have a sales tax, and small business owners are fighting back, arguing that the bike tax is effectively a new sales tax on their business and will impose new administrative costs because of the currently absent sales tax. The bike tax is expected to raise $1.2 million a year and cost $100,000 a year to administer.

Those opposed to the excise tax say they support finding new revenue sources for Oregon’s transportation infrastructure, but any new funding mechanisms must be equitable. They say it is unfair to tax a specific, small group of users of non-motorized facilities.

The debate has extended internationally, and people all over the world are divided on the matter. One small electric bicycle business in New Zealand, Think Electric Bikes, is opposed to Oregon’s bike tax. Co-owner Jonno says, ‘It’s absurd. Bicycle and pedestrian trails benefit the whole community. Bikes actually help solve transportation issues, so it should be a community problem, not just cyclists and small business owners.’

The bike tax will include the taxing of e-bikes, which is a surprise to some as electric bicycles are often considered to be a grey area. ‘It’s not the most efficient way to go about raising funds’, Jonno added. ‘My hope is that the New Zealand government thinks bigger when making changes to our transportation plans. We have been noticing an increase in electric bikes for sale in Auckland and that’s a trend we want to see continue.’

Oregon is known for being a hub for bicycles and electric vehicles, so it will be interesting to see how commuters’ actions change when the tax is introduced. There are many online groups educating people about the bike tax, listing pros and cons and the consequences of each. Here in New Zealand, there has been no talk of a ‘bike tax’ yet.