Colin Drake, the owner of Canyon Creek Bicycles in Roseburg, isn’t sure how his customers will react to a new bike tax set to take effect Jan. 1.
Just to be safe, he has an answer ready to go.
“As bike shops, we need to explain the benefits, and hopefully everybody will be on board,” he said. He said he hopes an extra $15 will not deter customers from buying a new bike. The $15 bike excise tax will go toward improvements for bike paths.
Drake said mountain bikers will still need to pay the tax on their new bicycles too, even if the funding doesn’t go toward trails.
“Hopefully soon we can get that money toward improving mountain bike trails,” he said.
The bike tax is a part of a $5.3 billion transportation tax and fee package passed by the 2017 Oregon Legislature. House Bill 2017 also includes a 4-cent gas tax hike, a $16 vehicle registration fee increase, 0.1 percent general payroll tax and 0.5 percent tax on new car sales. Revenue from the taxes and fees will be used to fund improvements to public transportation, roads, bicycle paths and other projects related to transportation.
A customer buying a new human-powered bicycle with wheels 26 inches or larger and a price of $200 or more will pay the flat bicycle excise tax of $15. This would create an estimated $1.2 million per year to help fund new bicycle and pedestrian lanes, sidewalks and crossings near schools, as well as off-road paths separate from vehicle traffic, according to the Oregon Department of Transportation.
Also on Jan. 1, new car sales for vehicles with 7,500 miles or less and a maximum weight of 26,000 pounds will include a new tax of 0.5 percent of the retail price. This tax revenue will fund a variety of transportation projects as well as rebates of up to $2,500 for purchasing or leasing new electric vehicles, as the Oregon Department of Environmental Quality states on its website.
But to Clint Newell, owner of Clint Newell Auto Group in Roseburg, the new tax is “just another money grab by the state.”
“There’s a chance it could be found unconstitutional because it’s a sales tax that was never voted on,” Newell said. According to him, the people who buy electric vehicles are going to buy them anyway, with or without the incentive, and he doesn’t think the tax will cause more people to buy them.
“Electric vehicles tend to be smaller commuter-type vehicles, and that only fits a small number of people in our market,” said Newell, adding his company sells a small amount of electric vehicles compared to the number of gas-powered cars its sells. “This is a tax designed for Portland, it doesn’t really have much to do with the rest of Oregon. They certainly weren’t thinking of people who live in Roseburg when they came up with this program.”
Dealers must report and pay the tax at the end of each calendar quarter, and a pending lawsuit filed about the tax doesn’t change the dealer’s responsibility to pay it.
According to the Oregon Department of Revenue, money generated from a vehicle use tax will go straight to the state highway fund, covering maintenance and new construction of public highways, roads and streets.
This tax applies to Oregonians who purchase new vehicles outside of Oregon for use in the state. These vehicles would meet the same qualifications for the vehicle privilege tax. The tax, which is also 0.5 percent of the sales price, may be paid by the out-of-state dealer or the customer.
House Bill 2017 named specific highway projects it would fund across the state, including $40 million to replace the historic Scottsburg Bridge on Oregon Highway 38 in 2019, and $35 million for the Southern Oregon seismic triage project in 2020. This project is meant to improve bridges and slopes to withstand the expected Cascadia Subduction Zone earthquake along Interstate 5 from Cottage Grove south through Douglas County to the California border, and along Highway 140 to Klamath Falls.
Newell said he’s all for improving infrastructure, but he thinks the increased taxes show the state has done a poor job of using the money it already has.
“The state collects an enormous amount of money and the fact they don’t have enough to fund roads and highways shows bad leadership,” Newell said.
A statewide transit tax would fund bus systems and other forms of public transportation, except for light rail. It will be 0.1 percent of the wages of Oregon residents, regardless of where they work, and non-residents who work in Oregon.
Employers who fail to deduct and pay the tax to the Department of Revenue will be subject to standard penalties. Oregon residents working for certain out-of-state employers must self-report and pay the tax when they file their personal income tax return, if their employer chooses not to withhold it.