January 25, 2005

Shopping bag tax, that they call a ‘fee.’

One of the worst excuses for taxes in my mind is imposing them on habits or things that certain groups want banned. I suppose this is the liberal version of tax breaks for habits or things the society want to encourage, like charitable donations (often given to agencies that end up providing public services,) or buying hybrid cars.

This is a 17 cent per bag tax on plastic and paper bags at grocery stores designed to decrease the amount of ecological damage caused by plastic bags --- and I only can guess the tax is put on paper bags to decrease their use to 'save trees.' Of course this is in San Francisco.
"Environmentalists say plastic bags jam machinery, pollute waterways, suffocate wildlife and often end up as eyesores in trees or bushes."
Okay why do they point out machinery --- when they are environmentalists? Anyhow, there are some cases where this sort of taxing isn’t all that horrible, for example taxes on liquor and cigarettes --- of course I doubt either of those taxes end up decreasing the consumption of those items all that much. You run into the same fundamental problem --- you learn about this in Econ 101...

If a good’s price increases one of a few things happen:
  • Consumers stop buying that type of good completely.
  • Consumers buy less of that type of good.
  • Consumers buy a similar type of good, but no longer that good.
  • Consumers buy more of the good.
  • Consumers continue to buy the good. (No Effect)
Now the CNN article pointed out how this type of tax is:
"a strategy [that] has been successfully employed in the nations of Ireland, South Africa, Bangladesh, Australia and Taiwan."
What they don’t point out is the SF tax applies to both types of grocery bags, plastic and paper --- however the Irish tax only applies to plastic.
"Shoppers in the Republic of Ireland are to be taxed on their use of plastic bags from Monday."
This is the problem, if both options (paper and plastic) are taxed; the consumer tends to absorb the tax, instead of changing their behavior. Think about it like gas taxes, do higher gas taxes (and so gas prices) actually get you to use something other then gas? No, generally you need the gas --- you have no other option --- so you just complain that ‘Man! Gas is getting expensive.’

Since in Ireland consumers have the direct choice of tax-free paper bags, or taxed plastic bags --- they will be more likely to change their behavior slightly to save money. However this change in behavior is no where near as dramatic as using re-usable bags. Now I don’t have a problem with people using re-usable bags, but giving people a discount for using them, i.e. encouraging good behavior, I think would be just about as effective --- without punishing everyone.

Also would this tax include the same type of exemptions that the Irish one does?
"However, certain type of plastic bags will be excluded from the levy. These include re-usable shopping bags which are sold for 70 cents or more, bags used to contain fresh meat, fish or poultry, bags used for loose fruit and vegetables and other foods that are not otherwise packaged."
The funny thing is this tax will most likely affect the poor and lower middle class a lot more then any other group. Do you think that the rich in SF are really going to care about 17 cents? Heck, they’ll probably as for it to be double bagged! While the poor, who might care about the 17 cents will try and stuff everything they can into the least amount of bags, and they will most likely break in the parking lot --- ruining their food, and spreading more waste.


At January 26, 2005 11:32 PM, Blogger J. said...

Whaaat? That's the most ridiculous thing I've ever heard. Do those people not have better things to think up than bag taxes? I'm glad I don't live in SFO because I use the plastic bags for my used cat litter. I mean, you don't want that crap loose in the trash!


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