Taxing plastic bags

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According to MSNBC, San Francisco is considering putting a $.17 tax on plastic grocery bags:
SAN FRANCISCO - City officials are considering a proposal to slap a 17-cent surcharge on paper or plastic shopping bags, a debate sure to be watched as a bellwether for other communities across the United States.

While no other U.S. city imposes a shopping bag tax, such a strategy has been successfully employed in the nations of Ireland, South Africa, Bangladesh, Australia, Shanghai and Taiwan.


Environmentalists say plastic bags jam machinery, pollute waterways, suffocate wildlife, use up finite supplies of fossil fuels and often end up as eyesores in trees or bushes.


The environment commission says the 17-cent figure represents an estimate of the costs to the city to clean up and dispose of each plastic bag.

We would be setting a trend, certainly, of a city of our size to be issuing this kind of supplantation of plastic bags for an alternative, something more environmentally friendly, Mirkarimi said.

The first question we need to ask is: what does "successfully employed" mean? Presumably what they mean is that it's reduced the number of people using plastic garbage bags--or of plastic garbage bags littered--but let's take a step back: there's got to be some right number of plastic bags used. Now, it's quite possible that the people writing this ordinance think the number is zero, but obviously that's not the intention of that ordinance, since then you would simply make them illegal. So, in order to know whether this is being successfully employed we first need to know what the right number is. The Irish example that's being positively cited here is claimed to have produced a 95% reduction in plastic bag use. If that's the right number, wouldn't it be simpler to ban them entirely?

The size of the tax makes it pretty clear what the intention is here: it's set to be the claimed price of cleaning up the bags. Clearly, then, this is intended to be some sort of primitive Pigouvian tax where the cost is set to match the externalities. If you're using this strategy, then the appropriate metric is that the efficient number of bags being used. I wonder if anyone involved has any idea what an efficient number is.

In principle, of course, an appropriate Pigouvian tax should produce an efficient result. The only problem is, this particular Pigouvian tax is being executed in a fairly incompetent fashion: if you're going to have a tax like this, you want it to disincentivize the behavior you don't like, which in this case is presumably littering. The problem here is that everyone who uses plastic bags is paying, even if they don't litter, so it's not a very efficient incentive. What would be an efficient incentive would be a deposit. A deposit is superior in two respects. First, it incentivizes people not to litter. Second, it incentivizes other people to pick them up, just as currently happens with cans and bottles.

What a tax of this kind does is disincentivize all use of plastic bags. Now, that makes sense if you think that the primary negative externality with plastic bags is the environmental cost of producing them. I'm fairly skeptical that that's the case but even if it were, they're far from the only kind of plastic that's widely used, and I suspect they all have similar environmental impacts per barrel of oil used, so why not simply tax the use of fossil fuels for plastic production in general?

Credit: Kevin Dick alerted me to this story.


FWIW, the Irish tax works nicely; plastic bag litter, which was a pretty common eyesore, is a thing of the past. 95% sounds about right.

regarding whether it should be a tax on receipt or disposal of the bag -- I think you're overlooking the cost of running the scheme. If the scheme involves *giving* people money for used bags, as a deposit would, then you have a need for an infrastructure to support payments in the opposite direction -- and given possibilities of fraud by unscrupulous consumers, there's more overhead involved for payments in that direction.

i'm living in ireland and the whole thing surprised me how easy it was to introduce.
we're also amazed how the euro introduction and smoke ban worked so easilly...but then we are having some problems getting used to the switch to metric speed limits which happened last week.

the way the bag tax worked out is that the supermarkets etc. made better quality reusable canvas bags so that people tend to be able to reuse them and feel they have some value over the traditional throwaway plastic.
I think the supermarkets will replace any worn out or very old ones.
its 15c euro tax on every bag.

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