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D.C. bag tax: Paper, plastic or puffery?
When the D.C Bag Tax went into effect on Jan. 1, 2010, the Wall Street Journal quoted the owner of Pleasure Place wondering if the adult toy store would be required to charge for paper or plastic bags as a result of selling edible body frosting.
Being asked by a department store clerk if a bag is desired for a stack of purchased clothing due to a Godiva Chocolatier located somewhere within the sprawling building causes most people to opt for a pose this side of a shoplifter or looter.
But the plastic bags at grocery stores available to package fruit, vegetables, nuts, candies, bakery goods, frozen foods or flowers are exempt. Restaurant “doggie bags” are free – as long as they are paper. Same for the bags at fast casual restaurants and take-out shops as long as there are tables and chairs. The list goes on.
As a government “revenue enhancer” the D.C. Bag Tax is one of the most financially inconsequential new levies imposed – costing less than 20 bucks a year for a resident or household using one bag a day or seven bags a week at a cost of only five cents a bag. Compared to the city’s high income, sales and restaurant/bar sales tax rates, we’re talkin’ chump change.
As a result, the intense public controversy prior to the law’s passage two summers ago has died down.
D.C. remains the only major city to tax paper and plastic bags. Proponents of the law assumed other locales would soon follow suit. But attempts at similar mandates – either by legislative action or voter initiative – have proven hugely unpopular and almost universally unsuccessful.
When gay Virginia House of Delegates member Adam Ebbin (D) introduced an identical bill when the District’s law took effect, it was quickly killed by the state’s General Assembly – the same fate each of the three times he has tried.
While attempts to impose a bag tax in Maryland have also failed, one of the few jurisdictions to pass a similar law is neighboring Montgomery County, which implements its nearly identical tax next January. This creates a tiny local island of social engineering while most are encouraging the recycling of plastic, and paper, bags as a better option and a more responsible environmental policy.
Efforts by some Democrats in Congress to introduce nationwide bag tax legislation have gone nowhere fast. Voters overturned a bag tax passed by the Seattle City Council and the Colorado Legislature abandoned the idea. Other major cities like New York, Chicago, Philadelphia and Tucson have chosen plastic bag recycling over D.C.’s approach. So have the states of California, New York, Delaware and Rhode Island.
That’s something community member Steve Russell, vice president of plastics for the American Chemistry Council, says makes smart sense.
“Collecting more plastic bags means more valuable recycled material is available for manufacturers – usually small businesses – that rely on it,” Russell notes. Over a trillion pounds of post-consumer plastic bags collected nationwide are recycled annually to make lumber for backyard decks and fencing, lawn and garden products, pallets, crates, containers, piping, building and construction products, automotive applications and new plastic bags.
In fact, one of the most significant downsides to bag taxes is that at-store recycling programs cease.
After Ireland passed a plastic bag tax in 2002, usage decreased by almost 90 percent — much higher than in D.C. — but the sale of heavy-gauge garbage bags and other plastic bag products increased by 400 percent. A “rebound effect” soon followed and the purchase of taxed bags typically used as trash liners, food wrapping and pet clean-up rose after the initial decline.
A widely reported recent District government undercover survey resulted in the discovery that 38 percent of retailers subject to the law are not collecting the tax.
The D.C. Department of the Environment’s “Skip the Bag, Save the River” television ads currently in frequent rotation seem to be in response to this development – reminding viewers that “the law is still in effect.”
The tax collected in the first year was only about half the projected total, muddying the public perception of the intent of the law. Is it to raise funds for the long-running Anacostia River cleanup or to discourage bag use, or both? And how to reconcile the two, especially amid suggestions to redirect the money to the city’s general fund?
That is the most vexing perceptual contradiction of the law. The fewer taxed bags used, the less the amount collected.
Ironically, businesses collecting the tax also profit from the law. No longer burdened by the expectation that complementary bags will be provided, large retailers such as CVS, 7-Eleven, Giant, Safeway and Whole Foods both reduce their expense and retain a portion of the proceeds from each plastic or paper bag requested. They also sell reusable bags and retain double the standard fee if they credit consumers when used.
Another warm-and-fuzzy-feeling regulation originating with D.C. Council members Tommy Wells (D-Ward 6) and Mary Cheh (D-Ward 3), it is riddled with mixed messages and unintended consequences.
Hand me a plastic bag – this is one dog of a mess!
Mark Lee is a local small business manager and long-time community business advocate. Reach him at OurBusinessMatters@gmail.com.
Tagged with Adam Ebbin, bag tax, Pleasure Place, Wall Street Journal
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