Colorado Springs’ Bicycle Excise Tax
Colorado Springs is one of a handful of places with a Bicycle Excise Tax, to our knowledge there are only three places that have a tax of this nature; Honolulu, the state of Oregon, and Colorado Springs
The Colorado Springs bicycle excise tax is a $4 tax levied on every new bicycle (with wheels larger than 14”) sold in the City of Colorado Springs. It applies to specialty bicycle stores as well as department stores, but does not apply to internet sales. The tax has been in place since 1988, and was intended to provide a means for users to fund bicycle facility improvements proposed in the citywide master plan.
As written in the authorizing ordinance (included to the right)
“The purpose of this [bicycle excise] tax shall be to provide funding for City bikeway improvements. The first priority for the use of the revenues from this tax shall be the construction of off street bicycle paths designated by the City bicycle plan. The second priority shall be other bikeway improvements recommended by the bicycle plan.”
In 1988, it was the sole source of funding for trails or on-street facilities, although subsequently voters approved the Trails, Open Space and Parks (TOPS) sales tax in and the Pikes Peak Rural Transportation Authority (PPRTA) sales tax, both of which have contributed to the acquisition and construction of the City’s on- and off-street bicycle network.
See the chart on the left for yearly revenue that has been received from the bike tax since 2003. You are able to see a significant decline in revenue from 2010 onward. This decline is likely related to a increase in online bike sales.
In the context of other, larger funding sources for more expensive projects, the use of the tax has changed over time. The City’s 2019 budget says that this revenue source is designated for “maintenance repair and expansion of the City’s bikeway system” and “bikeway improvements as recommended in the City’s Bicycle Plan.” In recent years, it has been used for projects including: Bike To Work Day and the Corporate Challenge, grant match for an infrastructure project, public engagement processes, a Complete Streets policy project, and intern support.
2020 COS Bike Tax Figures
In light of media interest in the increased demand for bicycles and bicycling during the pandemic, and the fact that the City’s excise tax provides easy visibility into the retail demand for bicycles, there have been questions about how our tax revenues in 2020 compare to previous years.
Please note the following:
- These are the taxes in the month they are paid to the City. Most retailers turn taxes over to the City the month after they collected the tax from the purchaser, so February revenue reflects January sales, for example.
- Some retailers are set up to pay quarterly, so a bump in revenue in January (representing Q4 of the previous year), April (Q1), July (Q2), and October (Q3) is expected every year.
- 2020 growth in May and June is substantially higher than the last few years.
This tax is not part of the City’s general fund and is accounted and administered separately. The annual amount of bike tax allotted in the budget represents the previous year’s revenue. Furthermore, the City develops its annual budget starting midyear the previous year, and therefore bases the allotment on revenue estimates, so it’s never a dollar-for-dollar match. This means that higher revenues will result in more funds that can be spent by the bike program in 2021 and perhaps beyond. The budget office and the bike program will discuss together how to appropriate the increased revenue, whether as a one-time windfall, a rainy-day fund, or some solution in between.
The chart below shows the cumulative revenue adding revenue from prior months to give a running total.
*July through December uses the average to get to the yearly total as we only had monthly number through June.