D.C's Bag Tax

[phej]

From WSJ: Sara Murray (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.)
The Washington, D.C., bag tax seemed simple enough: Beginning Jan. 1, grocery stores in the district would charge five cents a bag, plastic or paper. The goal was to cut down on waste and raise money to clean up the polluted Anacostia River.

But nearly a month into the program, it's turning out that government is having trouble legislating its way out of a plastic bag.

The levy got off to a relatively smooth start in the district's grocery stores, some of which handed out free reusable bags to ease the pain. Then things got complicated.

The law, passed unanimously by the City Council and signed into law in July, applies to anything sold at any store that sells food. But deciding what constitutes a food store is easier said than done...

Oh, WSJ, you put a chuckle on my face today from this story. So, it's probably a good thing levy a price for the paper bag, to encourage folks to not be wasteful, but it seems as though the regulation has some complications.

[Warrior]

What a mess. Wish I lived there so I could demand a box for every purchase.

[rahdam]

Uhh...why is government concerned with this? Cash grab? I think so.

[phej]

Uhh...why is government concerned with this? Cash grab? I think so.

It's an incentive to get people to use reusable bags. I actually had a canvas bag that I used for grocery shopping. "Had" because I tossed it in the laundry one day and it came out shredded. Ever since then, I've get the paper bags for groceries.

[blueback]

I guess the shopping bag industry wasn't paying attention.

This seems like the sort of tax that would disproportionately hit those of a lower socio-economic status. A tax on the poor, if you will.

Why should the poorest section of society pay to clean up a river that was polluted by the wealthiest section?

[phej]

Linky to the actual ordinance:

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huh. I didn't know the Anacostia River was polluted by the wealthy. (I'm not familiar with D.C.). I guess it figures the elite would want to create a regressive tax. What's a nickel to them?

[Blse]

Uhh...why is government concerned with this? Cash grab? I think so.

Because the pollution caused by the use of disposable bags is an externality (side-effect). Externalities introduce inefficiencies into the economy and Pigouvian taxes (taxes with the express purpose of altering behavior) are the common remedy to reduce the effect of negative externalities. It's not a cash grad but an attempt to correct an inefficiency. It is based on legitimate economic theory, but there seems to a flaw in the way the law was written (which can be corrected through sufficient effort).

---------- Post added 01-25-2010 at 08:18 PM ----------

I guess the shopping bag industry wasn't paying attention.

This seems like the sort of tax that would disproportionately hit those of a lower socio-economic status. A tax on the poor, if you will.

Why should the poorest section of society pay to clean up a river that was polluted by the wealthiest section?

Yes, like all taxes on consumption this is a regressive taxes. However, not all taxes are designed to raise revenue. Certain taxes (such as on alcohol and cigarettes) are also designed to encourage and discourage certain consumption patterns. Often such taxes will be regressive if the behavior to be discouraged is wide-spread among the general population (like the use of disposable shopping bags). The poor can avoid this type of taxation by no longer engaging in the activity that is to be discouraged (as can any other segment of the population).

[phej]

Externalities introduce inefficiencies into the economy and Pigouvian taxes (taxes with the express purpose of altering behavior) are the common remedy to reduce the effect of negative externalities.

According to the wikipedia (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts._sources), the Anacostia River is polluted from raw sewage, not an overabundance of grocery bags. Wouldn't it have been better to raise the price of water to discourage water usage and maybe use the extra-revenue (I don't know how price-inelastic municipal water is) to fund sewage treatment facilities instead of the bag tax which is a bit disconnected from water consumption?

[Architectonic]

LOL in my state they banned the use of our typical (plastic) bags. Now its reusable only - or cardboard boxes which everyone just shoves in their recycling bin at the end of the week.

[Night Runner]

From what I understand, this practice is common in Europe. Why not just copy-paste their regulations?

[Blse]

According to the wikipedia (To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts._sources), the Anacostia River is polluted from raw sewage, not an overabundance of grocery bags. Wouldn't it have been better to raise the price of water to discourage water usage and maybe use the extra-revenue (I don't know how price-inelastic municipal water is) to fund sewage treatment facilities instead of the bag tax which is a bit disconnected from water consumption?

Given those facts, yes. If your purpose is to the reduce the negative effects of pollution you want to tax that which is causing the pollution - in this case sewage. My main point was that economically the concept behind the tax is sound - taxing an activity to reduce it because it has negative side-effects is a legitimate thing to do.

[Blum]

When is taxing not economically sound? (for those collecting the taxes)

[Aronnax]

When is taxing not economically sound? (for those collecting the taxes)

When the drag on the economy due to the increased tax causes a drop in productivity large enough to decrease gross tax revenue. Consider the reaction of most citizens if there was a 100% tax rate if you want an example of what I'm talking about.

[Blum]

I understand what you're saying aronnax, but let's also consider that the tax revenue generated by something not taxed starts at 0. Even if 1 person buys the item at an inflated price, there is a tax revenue increase.

[Aronnax]

I understand what you're saying aronnax, but let's also consider that the tax revenue generated by something not taxed starts at 0. Even if 1 person buys the item at an inflated price, there is a tax revenue increase.

Obviously there's someplace in the middle where revenue can be generated with minimal economic impact and distress to the taxpayer.

In this case the point was to make certain decisions slightly uncomfortable and earmark the revenues for something constructive rather than dropping additional revenue into the general fund. Excess general fund money is one of the most common sources of government bloat. By earmarking the revenue it keeps it from turning into a general revenue "lever" to manipulate instead of making difficult decisions.

The biggest problem was the law was written in a very sloppy manner.

[Blum]

I agree with you here aronnax.
I also have a question.

When the government earmarks a tax, do they stop taxing after they've raised the funds to do what they accomplish?

More specifically, how much will it cost to clean the river?

*edit*
Here is where the tax revenue can be spent.
(b) The Fund shall be used solely for the purposes of cleaning and protecting the
Anacostia River and other impaired waterways. Funds shall be used for the following projects
in the following order of priority:
(1) A public education campaign to educate residents, businesses, and tourists
about the impact of trash on the District’s environmental health;
(2) Providing reusable carryout bags to District residents, with priority
distribution to seniors and low-income residents;
(3) Purchasing and installing equipment, such as storm drain screens and trash
traps, designed to minimize trash pollution that enters waterways through storm drains, with
priority given to storm drains surrounding the significantly impaired tributaries identified by the
District Department of the Environment;
(4) Creating youth-oriented water resource and water pollution educational campaigns for students at the District public and charter schools;
(5) Monitoring and recording pollution indices;
(6) Preserving or enhancing water quality and fishery or wildlife habitat;
(7) Promoting conservation programs, including programs for wildlife and
endangered species;
(8) Purchasing and installing equipment designed to minimize trash pollution,
including, recycling containers, and covered trash receptacles;
(9) Restoring and enhancing wetlands and green infrastructure to protect the
health of the watershed and restore the aquatic and land resources of its watershed;
(10) Funding community cleanup events and other activities that reduce trash,
such as increased litter collection;
(11) Funding a circuit rider program with neighboring jurisdictions to focus
river and tributary clean-up efforts upstream;
(12) Supporting vocational and job training experiences in environmental and
sustainable professions that enhance the health of the watershed;
(13) Maintaining a public website that educates District residents on the
progress of clean-up efforts; and
(14) Paying for the administration of this program.

"Administrative costs for the first year, including a compliance officer, are projected to reach $105,450" WSJ

So they have to tax 2,109,000 bags just to pay for the administration of this tax. Wonder how long it's going to clean this river.

[Blse]

When is taxing not economically sound? (for those collecting the taxes)

When it distorts the market to such an extent that the negative impact on society outweighs the positive impact the programs funded by the tax are having. For example, income taxes reduce the incentive to work and increase the price for labor - labor is treated as more expensive than it actually is and employers are more reluctant to hire. The market uses prices as signals to determine what should be made in what quantity. When you tax, you start messing with prices, which can have a detrimental chain-reaction through the economy.

I agree with you here aronnax.
I also have a question.

When the government earmarks a tax, do they stop taxing after they've raised the funds to do what they accomplish?

More specifically, how much will it cost to clean the river?

*edit*
Here is where the tax revenue can be spent.
(b) The Fund shall be used solely for the purposes of cleaning and protecting the
Anacostia River and other impaired waterways. Funds shall be used for the following projects
in the following order of priority:
(1) A public education campaign to educate residents, businesses, and tourists
about the impact of trash on the District’s environmental health;
(2) Providing reusable carryout bags to District residents, with priority
distribution to seniors and low-income residents;
(3) Purchasing and installing equipment, such as storm drain screens and trash
traps, designed to minimize trash pollution that enters waterways through storm drains, with
priority given to storm drains surrounding the significantly impaired tributaries identified by the
District Department of the Environment;
(4) Creating youth-oriented water resource and water pollution educational campaigns for students at the District public and charter schools;
(5) Monitoring and recording pollution indices;
(6) Preserving or enhancing water quality and fishery or wildlife habitat;
(7) Promoting conservation programs, including programs for wildlife and
endangered species;
(8) Purchasing and installing equipment designed to minimize trash pollution,
including, recycling containers, and covered trash receptacles;
(9) Restoring and enhancing wetlands and green infrastructure to protect the
health of the watershed and restore the aquatic and land resources of its watershed;
(10) Funding community cleanup events and other activities that reduce trash,
such as increased litter collection;
(11) Funding a circuit rider program with neighboring jurisdictions to focus
river and tributary clean-up efforts upstream;
(12) Supporting vocational and job training experiences in environmental and
sustainable professions that enhance the health of the watershed;
(13) Maintaining a public website that educates District residents on the
progress of clean-up efforts; and
(14) Paying for the administration of this program.

No, the extent of taxation is usually not tied to goals. If the tax is designed to change behavior it makes sense of keep it permanently (to continue suppressing the behavior that is to be reduced). However, usually taxes are either permanent (until a different legislature changes them) or expire after a set period of time. There is a strong point to be made for more goal-tied taxation.

[Mader]

But the poor are punished because they may not be able to afford to buy reuseable bags. And, I use those grocery bags for small trash cans at home, so in effect they are being used more than once and I do not have to buy those little plastic bags for the cans - I am saving energy. Also excellent for picking up doggy doo and wrapping up dirty diapers.

[Night Runner]

But the poor are punished because they may not be able to afford to buy reuseable bags.
Punished? Really? People can still use and re-use and re-re-use (ad inifinitum) the plastic bags they currently have. Sure, the quality leaves a lot to be desired, but it's not like someone swept through the countryside and stole (nationalized? :p ) every single bag those poor, poor people had. Hell, everybody has large bags - purses, backpacks, briefcases, etc. Seems to me that this tax will only impact those who are too lazy and/or stupid to find bags of their own...

[reb]

1. the bag part...i used canvas sacks for awhile. the sackers would put the canvas sacks in the plastic sacks, and then put the whole mess in the cart. i did not correct the sackers; most of them are what is commonly referred to as 'retarded' employees....i think the human race is all retarded, so perhaps i have no discriminator to refer to the sackers. dint wanna hurt their feelings, ok? (even if it's not ok..it's ok).

2. the tax part; if one were to examine all the places we are taxed, one might be staggered. the 'overhead' for the taxes-the lazy ass bureaucracy-is already in place. they have to pay for themselves someway. this is what's behind increased gas taxes, rising property taxes, rising income tax, taxes on your phone service and camera's at intersections....there's likely some things i missed. get real...there is no enforcement cost increase. those who are sneaky enough are not going to pay much tax; those who are oblivious will pay more tax. tax the stupid; they'll pay up, and not look for alternatives.

[LaoTzu]

We have that in my neck of the woods (5c for a bag). It's not a tax though, it was instituted by the major groceries themselves.

It works... you can't help but see dozens of people with their own bags, and it's saving the grocers a small fortune. I overheard a manager from 1 store say something to the effect that they buy something like 200k fewer bags per month nowadays. I'd have scoffed at it, but it was a manager talking; so he'd know. And that was just one store.


That; coupled with the prevalence of self-scan should mean that in the coming year or two, my groceries should be that much cheaper....

yeah right... :P