Americans for Tax Reform recently commissioned a study on the now-two-year-old D.C. bag tax. The verdict: an utter failure with extensive economic consequences. These conclusions ignore the intent of the bag tax, which is to encourage environmentally conscientious behavior while raising money to mitigate pollution in the Anacostia River.
In a National Review editorial, ATR’s Patrick Gleason caterwauled about the purported shortcomings of the bag tax. Instead, he ignores the environmental implications of the policy and attributes the tax to “another veiled cash grab by the notoriously corrupt and economically inept D.C. City Council.”
The bag tax has come up short of revenue projections, raising $1.5 million as opposed to the anticipated $3.6 million in the first year. Why the shortfall? As Gleason explained, it “reflects the fact that shoppers altered their behavior to avoid the tax at an even greater rate than District officials expected.” Customers are toting their groceries in reusable bags, which some would say is the point of the tax in the first place. Although there is no reliable data for bag usage in the District, the Beacon Hill Institute, a fiscally conservative think tank that administered the study, found a 67 percent decline in bag usage—short of the 80 percent official projection.
Neither of these figures suggests that the tax has failed. Rather, the District implemented a relatively untested, smart program aimed at decreasing landfill waste and raising money to clean up the horribly polluted Anacostia River. Any reduction of plastic waste—especially a 67 percent decrease, as calculated by a conservative think tank—is a boon to the environment. The 4 cents per bag that goes to Anacostia preservation is an added perk.
Gleason is also anxious about the adverse economic impact of a so-called “rebound effect,” where plastic bag consumption rises again once the tax’s novelty wears off. They project that a 57 percent increase in plastic bag usage from 2011 levels will cause the city to raise the tax rate, leading to diminished disposable income and the loss of 136 District jobs. First, this rebound will come to a net 10 percent decrease, six years after the tax was passed. Second, the BHI assumes that customers will divest from D.C., fleeing the five-cent tax by going to Virginia and Maryland for their groceries and bodega sandwiches. Most D.C. residents are unlikely to go to such lengths to avoid the tax, considering the cost and inconvenience associated with traveling such distances.
These economic concerns do not acknowledge the environmentalism motivating this tax. Four of the five cents collected from each bag is designated for Anacostia clean-up projects and educational programs. These programs provide the intangible benefit of combatting the trend of environmentally unsustainable practices—not just coercing positive behavior in the short term, but raising awareness about the broader goals of environmentalism. Local environmental benefits elude the BHI’s short-sighted study.
