Tax Analysts Blog

Cyclists: The Next Great Source of Tax Revenue?

Posted on Jan 2, 2014

I like to ride my bike. I used to race. At some point I was avid, but now I just enjoy riding my bike. Anytime I can, I ride my bike to work. It’s blissful. Admittedly, I’m lucky to be in Northern Virginia so nearly all of my ride to work is on a bike trail. There’s no traffic and no cars. I’m getting exercise, reducing my carbon footprint, and otherwise benefiting from the experience.

I wonder if I would enjoy the experience as much if the act of riding my bike were subject to a tax. Chicago made news lately after a city councilwoman proposed a $25 annual “cycling tax.” The councilwoman, Pat Dowell, proposed the tax as a way of raising $10 million – assuming 400,000 cyclists come forward and register their rides.

Dowell also said she wants to require bikers to take a safety class. Dowell said the class would be “Rules of the road – like you do when you get your driver’s license. There’s been some accidents in the city. We’ve read about that. Some people just get on a bike. They don’t really realize what the rules of the road are or what the signal is for a left-hand turn, a right-hand turn. There’s some usefulness in having them take a short course.”

Chicago isn’t alone in considering whether cyclists are the next source of new revenue. A couple of states and localities consider bicycle registration or licensing laws each year, and a few have them on the books. Most, however, conclude that bicycle registration or licensing laws are too complicated and unenforceable, and deter folks from leaving their cars at home and hopping on their bikes.

While I strongly believe taxes should not be used to encourage or discourage behavior, the effect of requiring cyclists to register their bikes is not the big problem with these types of proposals. The real problem is that they don’t raise any revenue. Dowell’s suggestion that a bike registration fee would raise some $10 million for the city of Chicago is a pipe dream. Almost every cent would be used simply to administer the program.

A similar proposal was considered in Washington state in 2008. It was quickly set aside after officials from the Department of Revenue and Department of Licensing suggested it would actually cost the state to enforce the program.

Dowell’s proposal won’t go anywhere in Chicago because it lacks the support of Mayor Rahm Emanuel. Of the plan, Emanuel said, “I don’t think that’s the right way to go.” And he’s right. If raising revenue is the ultimate goal, a cycling tax isn’t the answer.

Read Comments (4)

Edmund DantesJan 4, 2014

The only reason that the revenue is too low is that the tax rate is too low. It
should be $250 per year, maybe even $500. Then it should be supplemented with a
license fee for pedestrians to use the public sidewalks. Let's try $250 per
pedestrian per year. Tourists could get short-term walking licenses--maybe a
month for $100, or a week for $50. And there could be a family rate--3 for the
price of 2, for example. All part of a comprehensive "if it moves, it gets
taxed" program to bring the Illinois revenue collection into balance with its
spending. Lord knows that the spending can't be reduced.

amt buffJan 4, 2014

If the government is going to license and tax cyclists, it needs to rationalize
traffic laws first. Cyclists shouldn't need to make full stops at signs and
signals. On the other hand, cyclists should not be entitled to block the lane
so cars cannot pass. Cycling side by side should be completely banned and
single file riding required. Time trialing on open public streets should be
treated the same as racing a motor vehicle.

Sharing of the road has to be fair to drivers and riders. Too many advocates on
either side want road sharing to be a one-way street.

Matt WojtkunJan 7, 2014

The registration and licensing is just too complicated and will breed backlash
from many avid cyclists, who will counter that city drivers are worse. Why not
just add a specific sales tax amount (percentage) applied to the point of sale
of a bicycle? The revenue could be marked for a public information campaign
surrounding the theme of "sharing the road" - revenue could go toward signs
informing the public on safe bike-car interaction, but, more importantly, bike
lane improvements that more clearly define where bikes travel and where cars
travel (see Copenhagen and other cities) along with more bike-specific stop
lights (16th and U Sts. NW in Washington, DC is a good example).

edmund dantesJan 7, 2014

"Why not just add a specific sales tax amount (percentage) applied to the point
of sale of a bicycle?"

Because people will buy their bicycles elsewhere if you do that. You are
adding complexity and overhead cost, but you won't add much revenue.

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