SALEM, Ore. (BRAIN) — Retailers will take on a new burden come January 1, 2018, as a new bike excise tax takes effect in Oregon. State lawmakers recently signed and passed a transportation bill that requires that retailers collect a $15 flat fee on the sale of bicycles with 26-inch wheels or larger that retail for more than $200.
The bike tax is part of several new measures in the bill to generate revenue to fund the state's roads and highways, which include increased car registration and title fees and vehicle fuel taxes. The bike tax is expected to generate $1.2 million a year over the course of 10 years and will cost about $100,000 a year to administer.
The transportation funding bill, HB 2017, awaits Gov. Kate Brown's signature to become official. But Oregonians expect the governor to sign off on the proposal. It passed the state house and senate with 39-20 and 22-7 yay/nay votes, respectively.
Oregon currently has no sales tax on products and goods sold so the bike tax becomes the first in the state.
"We maintain the position that there should be no bike tax in the bill," said Alex Logemann, director of state and local policy for PeopleForBikes, which worked with local advocacy group, The Street Trust, to amend the bill. "We don't think it's a strong way to raise revenue. It was the situation of trying to eliminate it, but if something was going to get pushed through, we wanted it to be much less of a burden to bike shops and purchasers and wanted to reduce it from 3 percent."
With Oregon becoming the first state to adopt a bike tax, other states could take note as they work on new transportation funding packages and struggle to come up with revenue they need for projects. Originally, the bill proposed a 5 percent tax on bikes sold for $500 or more, then it was reduced to 3 percent on bikes with 26-inch wheels or larger. The last amendments changed the excise tax to a flat $15 and the threshold to bikes sold for over $200.
"At least it's not a percentage tax as originally proposed," said Kelly Aicher, co-owner of Bike Gallery, with six stores in Portland. "We'll have to submit quarterly taxes to the state, which is a hassle. We're not used to collecting taxes so we're going to have to build that, plus bookkeeping and administration. The number I look at is way north of $50,000 a year for us in just fees alone that we're going to have to collect and send in. It's really hitting the small retailer. In our world where we keep losing business to e-commerce, there's no provision for e-commerce in it."
Dave Guettler, owner of River City Bicycles, sent letters to legislators and even a representative to testify on behalf of the shop. He said that while the $15 flat fee will be a burden on his business, he doesn't think it will impact sales. He's takes the long view.
"I don't think it will cut down on sales," Guettler said. "It's misguided but it's not the first time misguided efforts are put into law.
"It's a transportation bill not just a bike sales tax and there's a whole lot of things in it that are really positive for bikes," Guettler added. "Bottom line is Oregon is going to have a huge amount of money allocated to pedestrian and bike and alternative transportation efforts not because of a $15 fee on a bike but the transportation bill that passed. We'll see how it all shakes out."
E-bikes would be taxed as motorized vehicles in Oregon and be subject to a 0.5 percent tax under this bill. So retailers would have to collect and track taxes for bikes and e-bikes separately, another potential burden.
For more on what retailers think about this new law about to get signed in Oregon, look for the story in the August 1 issue of Bicycle Retailer.
