It won't surprise PubliCola readers to hear that I think a proposal to tax all bike sales over $500 (the cost of a low-to-mid-range road bike) is a terrible idea; I've explained why similar proposals to charge cyclists a licensing fee are misguided numerous times over the years.
Here are eight reasons a special tax on bike sales is a bad idea:
1) Cyclists already pay taxes that pay for roads. Most cyclists already have drivers' licenses (and cars), meaning that they pay the same vehicle license fees, drivers' license fees, and gas taxes as drivers who don't own bikes.
In addition, the common belief that drivers pay for roads with "user fees" is a fallacy. In reality, user fees like gas taxes and tolls only pay for about half the cost of building and maintaining roads; the rest, particularly for the local roads cyclists are most likely to use, comes from taxes that are paid by everyone, including sales taxes (which, incidentally, already apply to bike sales) and property taxes and levies(which you pay when you pay your mortgage or rent).
2) Taxing bikes discourages cycling. That makes no sense when you consider that the externalities associated with riding a bicycle are positive, whereas the externalities associated with driving a car are negative.
Driving, for example, increases a society's overall carbon emissions, promotes suburban sprawl (and the destruction of our dwindling rural and farmland areas), and increases the amount of our urban areas that is given over to highways (e.g., the Alaskan Way Viaduct) instead of, say, city parks. And unlike bicycles, car accidents lead to tens of thousands of fatalities every year. The proposed tax would add five percent to the cost of a $500 bike—the equivalent of a $1,000 price hike on a $20,000 car.
In contrast, cycling produces cleaner air (because bikes don't produce carbon emissions), healthier people, reduced traffic congestion, a lower rate of obesity, and lower health-care costs.
3) In addition to those positive externalities, cycling is neither (inherently) dangerous nor particularly difficult; therefore, like walking, we allow people to do it for free. Requiring cyclists to pay a special tax would be like charging pedestrians a special fee to buy shoes.
4) The more people are riding bikes, the fewer cars are on the road, which benefits everyone, but especially drivers, by reducing congestion and increasing the amount of available parking.
5) The proposed tax itself would add five percent to the cost of a $500 bike—an effective 50 percent increase in sales tax in the city of Seattle. That's a substantial increase (the equivalent of a $1,000 price hike on a $20,000 car).
6) On a similar note, as Tom at Seattle Bike Blog pointed out yesterday, the tax will make it much harder for small, local bike shops—which already operate at razor-thin margins—to compete with places like Fred Meyer and Wal-Mart (which sell cheaper bikes) and national online bike chains. Another blogger has dubbed the proposal "the Wal-Mart Protection Act."
7) Despite its disproportionate financial impact on cyclists and bike sellers, the tax would raise very little money—just $1 million [corrected to reflect that the total revenue over 10 years would be $1 million, or $100,000 a year], or 0.01 percent of the $10 billion package, according to Clibborn's own fact sheet.
8)Bicycles—which weigh a tiny fraction of the average car—don't significantly damage city streets, whereas cars, trucks, and buses do. So those who argue that bicyclists should pay "their share" for street maintenance aren't actually considering what cyclists' "share" is, compared to the cars, trucks, and buses that are producing the expensive potholes and other repair problems the city must address.
If anything, instead of penalizing bicyclists, the state should be providing incentives for people to ride bikes because they don't tear up the roads, while taxing users (like people who drive big, heavy SUVs) who cause the most damage.