Sunday, August 21, 2011

Tax Bikes for Better Bike Infrastructure?

If you follow the wonderful world of transportation you know that federal and state gasoline taxes are very important sources of infrastructure money. The federal gas tax provides about 90% of federal transportation funding and the California gasoline tax provides about 61 64% of our state-level transportation funding (see p. 6). Both of these taxes are assessed in cents per gallon, aren't indexed to inflation, and haven't been raised since the early 1990s, thus declining in real terms as inflation has eaten away their buying power.

So I'm here bringing up an idea which has been brought up before. Why not tax bicycles, their accessories, or their associated services (like repair) to pay for better bike infrastructure: more bike lanes, bike boulevards, sharrows, bike racks, or even public education campaigns?

I think it's a promising idea for several reasons.

1) It would address the biggest obstacle to cycling. In my opinion, the main obstacle to more cycling seems to be bad cycling conditions, not the money cost of cycling. Cycling is ridiculously cheap compared to owning a car or even riding a bus. A small surtax on cycling gear and services probably isn't going to deter too many people, but better riding conditions could have a big impact on inducing more cycling.

2) Gas taxes are less and less able to meet anyone's transportation needs. As cars get more efficient they pay less tax per kilometer driven. Political barriers make it very difficult to raise the taxes. Deferred maintenance on today's infrastructure will add up to higher costs tomorrow. Why be dependent on a funding stream that is increasingly dysfunctional?

3) It worked for cars. Taxing a mode of transportation to improve its infrastructure is a key reason why we have car dominance today. In the 1950s and 60s the interstate highway system was built with gas tax revenue. Although we sometimes think of raising gas taxes as a way to discourage driving, historically they have helped to encourage it by paying for roads.

4) It would be good politics. Providing a direct and visible source of transportation funding from bicycles to bicycle infrastructure takes one more argument away from people who want to portray cyclists as leeching off of tax money they aren't paying into. Also, a tax that only falls on bicycles is less likely to run into conservative blowback than a tax that falls on a broader base of people.

28 comments:

  1. Rolling eyes... Every once in a long while, someone (typically anti-bike) comes up with this idea, and I'll give you four great reasons why it's utterly silly:

    1. The revenue raised would be vanishingly small. A few years ago, just GM spent more on advertising than all Americans spent on everything bicycle related. This is great for consumers, since it means that bicycles are ridiculously cheap compared to cars, but it leads to a very narrow base for any targeted taxation; as such, any taxes would be sky-high in order to raise any revenue.

    2. It's incredibly disproportionate. The wear and tear on roadways is proportionate to the fourth power of a vehicle's weight; since cars and trucks are exponentially heavier than bicycles, that means that a "fair" price for a bicycle would be less than one-millionth the price for a car. Take a close look at a bike path or sidewalk: you'd be very hard pressed to find any wear resulting from bikes or pedestrians. The damage comes from weather, trees, water, etc., not from traffic.

    3. Bikes, bike shops, and bike manufacturers already pay taxes: sales taxes, payroll taxes, income taxes, etc.

    4. From a social standpoint, activities that benefit the society should be made cheaper while those that hurt society should be made more expensive; this is the concept behind congestion pricing and pollution taxes ("Pigovian taxes"). Bicycling is a net benefit to society, primarily due to its health effects, and should be encouraged rather than discouraged through taxation.

    As with many other similar arguments (e.g., "why not license bicyclists?"), a simple rationality test is in order: would we consider such a policy for walking? Is cycling really that much different from walking?

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  2. @ westnorth

    Thanks for your input. In response I would just say that bicycle taxes wouldn't have to raise very much revenue to start making a difference. Bike racks, bike lanes and such are generally pretty cheap. While I agree that a narrow base of taxation will raise less money than a broad base, it seems to me like an incremental step in the right direction.

    Would I ideally like to take a greater share of gas tax money to pay for this stuff? Absolutely. But in the real world how is that going to fly politically when we increasingly can't even maintain our roads and bridges adequately?

    At the end of the day a bike tax wouldn't be a big deal and it would move the ball forward on infrastructure. Maybe it's not ideally "fair" (or maybe it is), but maybe that's not so important as long as it benefits cyclists and leads to more cycling.

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  3. I wouldn't tax the individual things people buy, since those are very durable and don't fly off the shelves. I think I would go for taxing repairs, which I have heard is where the real money is for bike shops.

    As for westnorth's comment, the point isn't to raise money to combat the evils of biking, but to contribute towards making biking better.

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  4. "The federal gas tax provides about 90% of federal transportation funding and the California gasoline tax provides about 61% of our state-level transportation funding..."

    Right so the other 10% of federal and 39% of state transportation funding comes from where?

    For the most part from income, and property taxes.

    Raise the federal gas tax, and state auto reg fees to account for the the other 10% and 39% respectively, so that auto users are finally paying the full cost of road way maintenance/development, and then come talk to me about a a bicycle/ bike parts tax to pay for more bike lanes, and bike lane upkeep.

    Just another article written by an auto driver who is either too stupid to see or disingenuously tries to ignore the elephant in the room. Which is of course, the roads he uses to get back and fourth to his "Suburbia" are subsidized by others, including cyclists, and other non users.

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  5. @ Anonymous,

    I think the lack of civility in your comment speaks for itself, but I won't delete it because I value differing opinions, even if they aren't expressed gracefully . . .

    To address your question directly, in CA the rest of the transportation money at the state comes from truck weight fees ($1 billion) and the state sales tax ($1 billion). The state gas tax is responsible for ($3.5 billion). So actually also a slight correction, CA gas taxes are 63%, truck weight fees are 18%, and the sales tax is 18%.

    And yes, I do live in suburbia, but if you had been paying attention to this blog you would realize that it's because I don't have a choice :(

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  6. And yes, it doesn't add up to 100% because of rounding.

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  7. Assuming this is not, as Anonymous said, a disingenuous attempt to further subsidize suburban drivers... I say this is worth looking at if:

    1) The fee is miniscule and not applied to necessary/prudent accessories like basic lights and locks (maybe even helmets).
    2) This official buy-in of cyclists via a dedicated tax allows us to become part of the official conversation (for instance, by instituting mandatory on-bike bicycle classes for EVERYONE who wants a driver's license).

    Basically, I think this is going no where because of one instinctual appeal of biking that it is free (like walking, no license necessary as westnorth referenced). Along that line, because the main financial impediment to biking is obtaining a functioning bike, I would hate for a biker to be priced out of biking safely due to a tax and forgoing lights!

    Thanks for the thoughtful post (and streetsblog link).

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  8. The biggest problem I see with this idea is that I can virtually guarantee that if these taxes were raised we would see inflow from other revenue sources reduced, with the justification that cycling already has a revenue source.

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  9. @ Justin,

    That's interesting, I didn't think of the issue of taxing lights and helmets and such. Perhaps it would be best to exempt those for the sake of making sure people buy them. Maybe the first $___ of the cost of a bike could be exempted so everyone could get a cheap bike tax free.

    I don't think a bike tax is an ideal solution, but I do think that it might be better in some political situations than beating one's head against the wall trying to get a bigger cut of funding sources that go to things that most people view as a higher priority.

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  10. @ Coathangrrr

    I have to admit that's a possibility. But the question remains: what's the better alternative that can pass?

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  11. Why the naysayers? This would be a step in the right direction.

    If there were a licensing fee for bikes, as there are for cars, in conjunction with taxes on bike purchases, the monies raised could be significant. These monies could be used to improve conditions and increase ridership through education.

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  12. Who needs to be educated about bikes?

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  13. Thought provoking. Thanks, Chewie!

    I agree with (what I'm inferring to be) your premise: that (many) bicyclists would contribute financially toward better bicycle infrastructure. I know I would. I think a campaign built around establishing a dedicated funding source could have some political legs, but the best counterargument I've seen here is westnorth's: that it just wouldn't raise enough money to justify the controversy and political capital spent on implementing it, or even enough to spend on bike projects. If someone had stats on # of bike sales in a metro area, or revenue from bike sales in a metro area, it would be interesting to see what 3%, 5%, etc, of that looks like. Or would the fund be national? Adding a tax to bike rentals (tourism) might be another avenue more palatable to residents.

    Just to continue free associating, I wonder if you could make the case that: if (big if) bike sales in a given metro area could generate sufficient (again, slippery word) $ for bike infrastructure improvements in only that metro area, then more people will be encouraged to bike in that metro area, more people biking = more people patronizing local bike stores. Bikers also tend to shop locally, given their range of motion limitations.

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  14. What would a five dollar tax on each new bike generate? Even if its not much it would seem like more if the gas tax isn't renewed.

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  15. @ Suburban Avenger,

    After reading your comment I did some digging and found some info from the National Bicycle Dealers' Association.

    They say "The U.S. bicycle industry generated $6 billion in sales in 2010", up 15% from 2009 [1]. This includes bicycle and accessory sales, but apparently not services.

    So if a 1% bike tax (or several 1% state taxes) were placed on that entire revenue stream it would yield about $60 million per year. I don't know what the right percentage should be, but you can do the math for other percentages.

    That doesn't seem like a lot, but you can buy a bike rack that's good for a couple bikes for about $100. Say it costs $50 to install on top of that. So that tax would raise enough to install 400,000 bike racks per year if it were just used for that.

    -----
    [1] http://nbda.com/articles/industry-overview-2010-pg34.htm

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  16. While I like the idea and have thought about what it would be like to have a toll both of sorts on seperated bike paths, such as the minute man bike path in Boston. I wonder how much money would really be raised. I understand some posters on here have done some quick math pertaining to bike and rack sales. However, these items last a long time and would not be perchased again anytime soon or in a lifetime. Considering how long bicycle and bicycle related items last, we might see a dimishing return on bicycle taxes. But I would be up for paying more in taxes as long as they wouldn't be raided for other projects.

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  17. I would be fine with paying a tax for cyclists......I can just switch my tax for roads over to that funds because I don't drive. Or did you just want to tax us double?

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  18. Hi Joe,

    If you don't drive you're probably not paying a lot for roads. Portions of your sales taxes and income taxes are going to that purpose along with a lot of other purposes. As I point out above, the overwhelming majority of federal and state transportation money (in CA) comes from gas taxes.

    Also, even if you don't drive yourself, it's not quite fair to say that you don't use the roads. You probably use them directly as a cyclist and indirectly as a consumer of stuff that is delivered to stores by truck. Also, if you need emergency services they will probably get to where you live using the roads.

    So yes, I want to propose increasing taxes on bikes to have a dedicated revenue stream for bike infrastructure improvements. I think the alternative is often to settle for a situation where the infrastructure is too crappy to get many people to cycle.

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  19. Public rights of way should be funded by the public not some small groups within them.

    Bike lanes exist because a portion of drivers aren't courteous. Should I be taxed when buying a bike because automobile driver's can't share?

    The concept of limited special use taxes like this stems from the need to parse down the taxed population into small enough pieces so taxed don't have the political ability to fight such proposals. We need to realize that we live in a society and benefits and costs of that society should be shared.

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  20. I see it a bit differently. For a lot of people the thought of sharing a lane on a high speed roadway where cars have to pass is a deal breaker. It's usually a deal breaker for me.

    As long as cyclists have to try and pry away tax money from gas taxes or sales taxes to pay for cycling infrastructure, they will always be politically weak. Drivers usually outnumber them and would usually rather put the money to other purposes. Or, it is money that is paying for general public services like K-12 education and police.

    On the other hand if cyclists put a dedicated revenue stream on the table, a virtuous cycle can form: bike shop sales lead to better infrastructure which leads to more cycling and bike shop sales and so on. Again, I see this as a positive thing for cycling and bike shop owners, even if it is a bit counter intuitive.

    You can still fight to get funding from other sources, but why not have some of the funding be purely from and to bikes and independent of all the other claims that the other sources have on them?

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  21. I wonder if some of the "bike tax" advocates want to exempt "basic utility bikes" and go after the "Lance Armstrong wannabe" types with their $4000 unobtainium frames and custom-machined wheel hubs.

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  22. "As long as cyclists have to try and pry away tax money from gas taxes or sales taxes to pay for cycling infrastructure, they will always be politically weak."
    Cyclists are not trying to pry our own tax dollars away from cars, we are attempting to correct a situation wherein 99%+ of our transportation funding (which IS subsidized from other sources) goes toward projects that virtually require people to own, maintain and insure a motor vehicle in order to use them. I'd be fine paying my "fair share" for bicycle infrastructure if drivers were willing to pay theirs.

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  23. The debate in these comments shows the utter uselessness of this idea: it would require a huge amount of complex administration to raise a miniscule amount of money.

    And, as has already been noted, drivers don't pay anywhere near the full costs they incur on the roads, so why should cyclists? Not to mention, driving produces other external costs. Auto associated road deaths, increased obesity and other inactivity related health problems, pollution, and climate change, are not paid for by drivers. If they were, we'd have enough money to build all the bike lanes we wanted.

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  24. I can't get real enthusiastic about paying extra taxes so motorists can "get me out of the way." While I have seen photos of decent bike lanes, I have never encountered one personally that was better than nothing at all. Extra taxes to suffer?

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  25. As both a driver and a cyclist (I do a car/bike combo commute - I ride a folding bike that I keep in my trunk), I have to say that I don't think taxing cyclists/cycling stuff is the answer here. I know a few places have looked into licensing cyclists, but the licensing fees wouldn't come close to covering the cost of administration. And one of the more appealing factors of cycling for many people is that it saves money - that's actually a big part of the reason why I have the bike in my trunk.
    Also, @SteveA: buffered bike lanes are the way to go.

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  26. For a free on-line book on bicycling culture, visit http://bike-n-chain.blogspot.com/. Discuss this topic in depth.

    Bikes aren't licensed or forced to pay road use taxes because they cause no harm or wear and pose no threat. Private motor vehicles, trucks and taxis took over roadways from wheelmen, and ever since it's been a $1 trillion imposition on federal taxpayers matched by local percentages. The ratio of infrastructure spending on bike versus motor was recently raised to 1:2000 from practically nothing under Bush Administration, yet the historic return on bike investment is 20:1, particularly in health improvements.

    You must endure an automotive despoiled environment that no longer supports life freely as it once did. You don't dare drink from streams. Let's charge Big Oil to clean all that up instead of paying billions in subsidies to the most profitable business on earth, one that earns $6 for every $1 invested, then walks away from spills crying alligator tears of poverty. Only after fully tapping that deep pocket of blame would I be willing to discuss bike taxes.

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  27. An implied assumption in this blog is that motorists pay the full cost of motoring. In the UK, at least, the capital cost of roads is about £10 billion per year, but indirect costs (RVAs, health problems, preventable congestion, etc) are between £70-£100 billion per year. Motorists don't come even close to covering the true cost of motoring. And that's in a country which has far higher taxation levels.

    Furthermore, the Danes have quantified the cost of cycling and actually found that every km a person cycles has a net positive financial dividend. If you want to be better off financially, make motorists pay the full cost of their activity and then invest heavily in cycling infrastructure.

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