D.C. Bag Tax Falls Short of Stated Revenue Goals

by Kathryn Ciano on January 5, 2011 · 2 comments

in Environment, Nanny State, Personal Liberty

Last New Year’s saw the beginning of D.C.’s infamous bag tax, a 5-cent tax on each plastic shopping bag consumers take away from stores.

In the past year, those 5-cent increments have added up to $2 million in revenue for D.C. Moreover, plastic bag use has dropped by about 30 million bags annually, from about 87.5 million bags a year to 55 million in 2010:

Based on the $2 million take, people in the city used about 40 55 (see our update above) million paper and plastic bags in 2010. (Of course, that figure doesn’t include plastic bags which somehow skirted the tax, but still.) Prior to the bag tax’s implementation, the city was ripping through an estimated 22.5 million bagsper month. That’s one massive reduction in plastic bag use.

Great, right? In this era of Cap and Tax, ostensibly enviro-forward policy is all the rage. Yet, as Noam Chomsky delights in pointing out, the best way to analyze any program is to find out who benefits.

As it turns out, the District of Columbia’s stated goal for the bag tax was to raise enough revenue to clean up the Anacostia. So far, the tax has met about 54 percent of D.C.’s goal.

What about the Anacostia?

“There’s still trash in the river, but I do see fewer plastic bags,” said Dottie Yunger, the executive director of Anacostia Riverkeeper.

Right. Like all the packaging folks might otherwise have stowed in plastic bags for transit to the trashcan.

Americans for Tax Reform provided a short list of illustrations for why Pigouvian taxes like this one are ineffective:

San Francisco went so far as banning plastic bags outright in 2007, becoming the first American city to do so. That extreme measure had zero effect on the city’s litter mitigation goals, according to litter audits.

Many bag tax advocates point to Ireland as their standard bearer, with usage of plastic shopping bags declining by 90 percent as a result of its nationwide bag tax. What the na?ve greenies and money-hungry politicians who support bag taxes won’t tell you is that total usage of all plastic bags in Ireland actually increased by 10 percent following imposition of the bag tax.

How could that be? Over 92 percent of the population already reuses plastic bags for a cadre of basic household tasks such as lining trash cans. A new levy on bags at the checkout discourages this.

It’s also important to keep in mind that the bureaucrats who are going to siphon ever more money out of the D.C. economy aren’t exactly stewards of fiscal responsibility. Aside from increasing spending by 42 percent in just five years’ time, D.C. Council members think awarding themselves salaries that are higher on average than most governors is reasonable.

In fact, Mayor Fenty and council member Vincent Gray, D-Ward 5, each make more than every governor except Arnold Schwarzenegger. The new tax gives them a new slush fund.

Four cents of the new 5-cent bag tax will go into a fund dedicated to cleaning up the Anacostia River. The other penny will be kept by the retailer. Stores that provide incentives to bring reusable bags will retain 2 cents.

Mayor Fenty and council member Wells boast that it will simultaneously increase usage of reusable bags and tidy the Anacostia River. However, the best way to benefit the environment would actually be to request as many plastic and paper bags as possible at checkout, thereby ensuring the new Anacostia River cleanup fund is flush with cash.

Just like the politicians who claim that tobacco tax increases can both reduce smoking and provide a windfall for government coffers, Fenty and Wells either don’t see the fault in their own logic or they think their constituents are pretty gullible.

D.C. Council members aren’t the only lawmakers to warm up to this policy. More than 20 bag tax bills were introduced over the past year nationwide, and more are expected moving forward. This is just the beginning.

Shortly after the bill’s passage last summer, council member Jack Evans, D-Ward 2, stated that the new bag tax was merely “the first step to try to address this issue.” District residents and businesses would be wise to keep a close eye on the D.C. Council in 2010.

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