Bicycle Taxes and Registration

Bicycle Tax: There currently is no tax or registration fee associated with bicycles in the City of Chicago.

Background
Based on statistics from the U.S. Census Bureau, the National Bicycle Dealers Association (NBDA), and a PeopleforBikes
study, it is estimated that there are currently adult 704,659 bicycles in Chicago and approximately adult 105,119 bicycles
sold in Chicago each year. The City does not currently impose a tax or registration fee on bicycles purchased in the City of
Chicago or operating in the City of Chicago. From 2011-2016, the City of Chicago has spent over $21 million on capital
and maintenance of bicycle infrastructure.

Revenue Impact

Bicycle Tax
If the City were to impose a point-of-sale per unit tax for every bicycle sold within the City limits, the tax could generate
anywhere between $1.5 million and $4.2 million, depending on the tax level. The tax would be in addition to the regular
sales tax paid on a purchase. Bike shops operating within city limits would be required to charge and collect the tax from
customers. The following table provides a breakdown of possible revenue from a bike tax.

Point of Sale Bicycle Tax Revenue

Bicycles Sold (annually) 105,119 105,119 105,119 105,119 105,119 105,119
Tax Level (per bike) $15 $20 $25 $30 $35 $40
Yearly Tax Revenue $1,576,785 $2,102,380 $2,627,975 $3,153,570 $3,679,165 $4,204,760

Bicycle Registration
Creation of a program that charges bicycle owners a one-time fee to register their bicycle, and in return, owners receive a
sticker with a unique identifier and input of their bicycle and contact information into a database would provide a
deliverable requiring mandatory registration. The program can be implemented in the same way as the wheel tax.
Registering all of the current bicycles in the City could bring in an estimated $3.5 million to $7.0 million in initial revenue
and yearly revenues of $500,000 to $1.0 million.

Bicycle Registration Revenue

Bicycles in Chicago 704,659 704,659
Registration Fee $5 $10
Current Bicycle One-Time $3,523,294 $7,046,588
Registration Tax Revenue

Bicycles Sold per Year 105,119 105,119

Registration Fee $5 $10
Additional Yearly Revenue $525,595 $1,051,190

Estimated start-up costs for providing residents with a sticker are approximately $835,500, and yearly maintenance of
approximately $231,000. These costs include the cost stickers, technology costs and an additional employee at each
Clerks Office location.

1
 Bicycle Registration Cost
Start-Up Cost Yearly Cost
Bicycles in City of Chicago 704,659 Bicycles Sold per Year 105,119
Estimated Cost per Sticker $0.50 Estimated Cost per Sticker $0.50
Start-Up Sticker Cost $352,329 Yearly Sticker Cost $52,560
Tech Cost per Bicycle $0.51 Tech Cost per Bicycle $0.51
Initial Tech Costs $358,319 Yearly Tech Costs $53,453
3 Additional Clerk Employees $125,000 3 Additional Clerk Employees $125,000
Start-Up Cost for Current Bicycles $835,648 Yearly Costs for New Bicycles $231,013

A sticker with a unique identifier benefits residents by storing their contact information in a database accessible by CPD.
This could aid in recovery of stolen bicycles and identification of bicycles that are confiscated or recovered by CPD. It will
also provide the City with a database of where bicycle owners live within the City, which could help CDOT plan capital
projects in the future.

These revenue and cost estimates assume 100% collection and that customers will not shift their purchases to shops
located outside of Chicago and/or will comply with registration fee. Thus these estimates are maximums and not likely to
be achieved as there will likely be a portion of purchases that shift to suburban stores.

Legal Issues
Under the Citys home rule authority, the City is able to establish a per unit tax on bicycles. This would require an
amendment to the Municipal Code. But, in order to comply with the Uniformity Clause of the Illinois Constitution, the
City must be able to justify the tax by demonstrating that there is a real and substantial difference between bicycles sold
in the City of Chicago and other non-taxed items and between items taxed at different rates. Further, current practice by
the City of Chicago and most municipalities discourages taxing an item that provides a positive environmental benefit.

Similar to the tax, any bicycle registration fee would require an amendment to the municipal code and would need to
comply with the Uniformity Clause of the Illinois Constitution.

Other Cities
Several Illinois municipalities charge nominal bicycle registration fees ($1-$2), including Carbondale, Evanston, Highland
Park, Lombard, and Naperville. These cities require bicycles to be registered and place a unique identifying sticker on the
bicycle to assist in recovery of lost or stolen bicycles.

Long Beach, Seattle, San Jose, and Los Angeles previously had registration programs, but these cities dropped the
comprehensive registration programs due to administration costs.

No major cities have implemented a Bicycle tax; however, the State of Oregon has recently implemented an excise tax on
the sale of bicycles costing more than $200.