Conservatively Speaking

"Paper or plastic? That'll be 25 cents"

Posted by Mary Lazich on June 7, 2010

Taxes

One has to wonder how this idea got by Wisconsin Democrats.

It’s called the bag tax. Fifteen states have proposed charging for paper, plastic bags or both ranging from five cents in  Connecticut, Maryland, Massachusetts, New Jersey, New York, and Virginia to 25 cents in Hawaii and the city of Baltimore.

The rationale offered by the bag taxers is that the additional charge will lead more consumers to reject paper and/or plastic and a cleaner environment will result. Like most good-intentioned policies, this one comes up short.

The Tax Foundation in Washington D.C. reports that the nation’s capital enacted a five-cent tax on most, not all paper and plastic bags during January 2010. Interestingly, exempted from the tax are those products used to bag newspapers. If the tax is supposed to help the environment by clamping down on villainous bags, why are some in D.C.  like the recyclable carryout variety not included?

How is the Washington bag tax faring? Poorly, to say the least. When asked, paper or plastic, it seems Washington consumers are opting for neither. A paltry $150,000 has been collected in the first four months of the bag tax. Revenue was supposed to fund clean up of a dirty river. The mayor of Washington now wants to raid the river clean up fund and put the money toward other unrelated services. Does that sound familiar, Wisconsin taxpayers?

Because the intended use of the bag tax is being altered, that makes the additional charge per bag, by definition, a tax as opposed to a fee. Proponents of the charge have preferred spinning it as a fee, claiming those paying stand to benefit. However, revenue collected and results have both been minimal. So the fee is actually a tax, just another means of seeking general revenue.

One of the consequences of a bag tax has consumers rushing to buy paper or plastic bags in bulk. In essence, as the Tax Foundation emphasizes consumers will “purchase products that have the same chance of ill effects as grocery bags.” In Ireland, a 20-cent bag tax led to a 77 percent increase in the sale of trash can liners.

Proponents can be their own worst enemies.  Seattle bag taxers oversold the concept, making ambitious pitches that the extra revenue would lead to reduced greenhouse emissions, reduced landfill deposits, and less street and ocean litter. Seattle voters rejected the bag tax during a 2009 referendum.

I suspect that despite the many question marks, bag tax proposals will surface across the country. Read more from the Tax Foundation.