Bag Taxes

UnintendedConsequences

Bag Taxes

Plastic retail bags – the kind you get from your grocer or at the corner store — are being targeted for bans and taxes in communities around the country, regardless of the unintended consequences.

Taxes on plastic carryout bags inflate grocery bills for shoppers, which is particularly harmful during periods of high inflation. Research from the University of Ottawa on Toronto’s bag fee found that consumers from lower socioeconomic backgrounds were not motivated to shift their bag habits and, thus, were more likely to be burdened by these taxes.

When jurisdictions establish bag taxes, it’s not only consumers who are harmed—businesses suffer too. During discussions about establishing bag taxes in Montclair, New Jersey before the state’s broken law took effect in 2022, one business estimated that updating their systems to be able to implement the tax would cost more than $10,000. While this may not seem like a considerable amount to big chains, it represents a significant burden for many small businesses—including those lucky enough to survive the pandemic.

Adding insult to injury for stores, research and anecdotal evidence underscore consumers’ willingness to drive out of their way to avoid bag taxes. Research on Los Angeles’ bag ban, which predated the California law discussed below, found that consumers were willing to travel to avoid these policies. As a result, the study found that stores in areas not covered by the City’s ban saw sales increase by nearly 10 percent, while stores inside areas covered by the bag saw sales decrease by nearly 6 percent, resulting in job loss at these stores.

While research shows that taxes are ineffective in driving consumers to alternative bags, they would not be a victory for sustainability even if they did impact consumer behavior. Lifecycle assessment after lifecycle assessment shows that the plastic carryout bag is the option with the smallest environmental impact.

Policies that are either designed to drive increased consumption of alternative products or those that actually do ultimately encourage consumers to make less sustainable choices and use products with larger environmental impacts.