Did you know that Colorado Springs is one of a handful of places with a Bicycle Excise Tax?
What is a bicycle excise tax? In Colorado Springs, since 1988, this means a $4 tax 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.
Colorado Spring’s Bike Tax History
In 1988, when the tax was first adopted, the Bicycle Excise Tax was the sole source of funding for trails or on-street facilities. Subsequently voters approved the 1 cent on every 10 dollar Trails, Open Space and Parks (TOPS) sales tax 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.
To our knowledge Colorado Springs is one of only three places that have a tax of this nature;
Honolulu has had mandatory registration since before 1988, but in 1999 implemented a $15 one-time registration (added at time of new bike purchase) for bicycles with wheels larger than 20 inches in diameter
The State of Oregon adopted a flat tax of $15 bicycle excise tax in 2017, to be collected at the point of sale for all new bicycles over $200.
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.
Funding sources for bicycle projects have changed over time, the use of the bike tax has changed as well. 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.
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. Bike Colorado Springs has, and will continue, to advocate for increased oversight on how revenue from this unique funding source is spent to improve bicycling in our city.
2020 COS Bike Tax Figures
2020 has been, to put it mildly, a weird year, and this is the case for the bicycle industry as well. This year has seen increased demand for bicycles and bicycling during the pandemic. With our City’s excise tax, we have more detailed visibility into the retail demand for bicycles, this has fueled 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.
Bike Colorado Springs has asked for July and August Bike Tax figures, we will update this chart when we receive that information.