Tiring Taxes? Analysis of a Bicycle Tire Tax

July 27, 2018

House Transportation and Infrastructure chairman Bill Shuster (R-PA) released his proposed infrastructure bill on July 23. Section 114 suggests levying a 10 percent tax on bicycle wheels at least 26 inches in diameter to apply to both tires sold individually and as a part of a bicycle (counted as 10 percent of the entire bike). Proceeds would be deposited in the Highway Trust Fund (HTF).

This suggested tax fits in with the user-pay model on which the HTF was based and is reinforced by Shuster’s additional strong suggestion of eventual mileage based user fees (MBUFs) for all vehicles, which repeals the transit vehicle fuel tax break, taxes diesel used by commuter railroads, and levies a tax on electric vehicle (EV) batteries. Introducing a federal tax for cyclists for the first time would include cyclists in the population seen as directly contributing to transportation funding – a step towards eliminating animosity towards cyclists on the road, yet still a minimal financial burden on cyclists.

Cycling is one of the least expensive modes of travel, with an estimated annual owning and operating cost of just over $300 in contrast to about $8,500 for a personal vehicle, somewhere in the middle for public transit, yet still coming in at about $300 more than the cheapest form of transportation: walking.  Cyclists who really want to avoid paying an extra $2 to $5 for tires could always switch over to a nineteenth century style bicycle sans tires or a folding bicycle, as there are many models with wheels smaller than 26 inches in diameter.

About 2 percent of federal transportation funding(over half a billion dollars) goes towards bicycle and pedestrian projects (the problem of double barreling bicycle and pedestrian begs an entire article of its own). The Joint Committee on Taxation estimates that the bicycle tire tax would generate $148 million in additional revenue over ten years, flowing directly into the currently hemorrhaging HTF. The Federal Government wouldn’t be the first to levy a tax on bicycle purchases.  The Oregon State Legislature passed a bill that went into effect January of 2018 adding a flat fee of $15 to every new bicycle sale, with mixed feedback, and Colorado Springs has had a $4 tax for all new bicycle purchases since 1988.

Inviting cyclists to pay into the Highway Trust Fund allows cyclists to be clearly seen as contributing to the pie. Most of the HTF dollars that are going towards cycling infrastructure are through The Transportation Alternatives Program (TAP). Funding bicycle projects benefits other modal users by taking cars off the road and encouraging emission-free travel. Showing the financial contribution of cyclists to infrastructure needs further enhances their benefit to the overall transportation network.

Adopting a user-pay mentality starts down a dangerous road though.  Roads are subsidized, especially when taking into account the opportunity and quality of life costs of the public space dedicated to asphalt, so are public transit systems, Amtrak, and flights through the essential air service (EAS) program. The model can invariably spiral as far as taxing shoes to help pay for sidewalk maintenance.  Cyclists unquestionably benefit from street cleaning, smooth pavement, functional signals, though would be safer on dedicated right-of-way. Including a pay-in from members of the cycling community could be a step forward in seeing the nation’s transportation network from an interlocking multimodal perspective. All modes stand to benefit from a multi-modal approach, and the pay-in from cyclists could help catalyze these benefits proving value back to the active transportation community as well as the rest of the population.

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