What do you use when you check out at the grocery store? I use my own washable canvas bags 90 percent of the time, but sometimes, with shame, I ask for plastic. I hate doing it: Plastic bags are simply horrible for the planet. But every morning, I grab a plastic bag from a plastic bag full of plastic bags. That’s because my husband takes a lunch to work, and even though I’ve asked that he use a reusable lunch bag, he prefers the ease of the “stuff-able” plastic bag.
I thought of my routines when I read about Memphis, Tennessee. This month, the city council may consider a 7 cent tax on plastic grocery bags. Five cents of the tax would fund water improvement projects. Says Councilman Berlin Boyd of the tax: “We are wanting more Memphians to say ‘I don’t want plastic bags, can I get the paper bag instead?’ Or, ‘I brought my own bag.’”
Boyd wants to achieve a difficult balance. He’s not calling for an outright ban of plastic bags, which would certainly help the environment. Rather, he wants to change shoppers’ behavior and raise revenue with a consumption tax that disproportionately affects low-income shoppers. Will he find that balance? And is a tax the best way to discourage shoppers from choosing plastic?
Some Memphis shoppers are already resisting the idea. Said one: “They’re about to tax us to death,” said one. “Try adding it up. When you have a large family and seven cents a bag, that’s a lot.”
But is it too much? Economic theory says that if you want to discourage a behavior with a financial cost, the price has to be higher than the cost of changing the behavior. What does it cost a person to stop using plastic bags? (What will it cost my husband to give up his plastic lunch bags?)
I asked 100 Facebook friends from around the country how they feel about a seven-cent plastic bag tax either per sack or per shopping trip. Of 33 friends who responded to my informal poll, 30 had no problem with the tax. Several even preferred an outright ban on plastic bags. Said one, “Please. Plastic is killing us.” Said another (who has a background in economics), “People will alter behavior if they have to pay.”
But three wanted no tax whatsoever. A teacher who brings plastic bags to school for children who forget their book bags and worries about her own rising grocery bills says she “would not be happy for a charge unless the store dropped their prices overall to compensate.” Another said that “seven cents per bag wouldn't hurt me any, but I could see how it would burden some who would rather buy food than fabric bags.”
As of 2017, according to the National Conference of State Legislatures, at least four US cities, one county, and the District of Columbia levied a tax on plastic bags. (Numerous cities and some states ban plastic bags altogether.) Washington, DC, became the first local government to levy a bag tax in 2010. Its tax is similar to what Memphis is considering: DC shoppers pay 5 cents per disposable bag. Much of the revenue goes to the Anacostia River Clean Up and Protection Fund.
While only a handful of places currently tax plastic bags, in 2015- 2016 lawmakers in 23 states introduced 77 bills to regulate plastic bag use in stores. At the same time, Arizona, Idaho, Missouri, New York, and my home state of Michigan have enacted legislation to preempt local governments from curbing the sale or use of plastic bags, including assessing fees or taxes.
In part, the political resistance is due to concern for lower-income consumers. As one local official in Ann Arbor, Michigan explained: “I don’t tax poor people.” Many shoppers double bag their purchases, he said, which could add 60 cents to a bill for three bags of groceries. Three bags of groceries are likely to cost far more than 60 cents, though. And at my grocery store, I can buy a reusable canvas bag for a couple dollars.
The thing is, bag taxes—at the right level—seem to work as intended. Take Chicago’s 7-cent per bag tax. In the first month after the city started taxing bags, the number of plastic and paper bags used dropped by 42 percent.
Not only that, but a tax on a disposable bag works better than say, a bonus for using a cloth bag. A 2017 paper by New York University’s Tatiana Homonoff shows how. She wanted to find out if it was better to frame a policy as a carrot or a stick, wherein you punish bad behavior or reward good behavior. She compared the effects of a five-cent tax on paper or plastic bag use and a five-cent bonus for reusable bag use. The tax decreased disposable bag use by over 40 percentage points. The bonus had almost no effect.
That’s because we tend to care more when we stand to lose something, even compared to a gain of equal value. We have “loss aversion,” as economists would say.
What will Memphis decide to do? Will it find that a 7-cent per bag tax is too high? If it considers a lower tax, will residents ignore it? Or will the Tennessee legislature end up preempting the city’s effort? We’ll soon find out.
In the meantime, I bought one of those handy plastic bag dispensers for my kitchen cabinet. Bags aren’t spilling all over my cabinet anymore, but they’re still ruining our planet. Maybe it’s time I preempt my husband’s lunch-bag preferences.
Wish me luck.
The Tax Hound, publishing the first Wednesday of every month, helps make sense of tax policy for those outside the tax world and connects tax issues to everyday concerns. Need help or have an idea? Post a comment, or send Renu an email.
