December 17, 2008
EFFECT OF PLASTIC BAG TAXES AND
By: Paul Frisman, Principal Analyst
You asked about the impact of plastic bag fees and bans on the sale of plastic trash can liners.
According to an Irish newspaper, that nation's largest food retailer reported a 77% increase in the sale of trash can liners after Ireland began requiring most retailers to charge a fee for each plastic bag they provide customers. Other retailers reported similar increases. However, the Irish government cautions that such statistics may be meaningless because there is no comparable data on pre-tax bin liner sales.
Australia and Scotland have extrapolated from the Irish experience to project the impact of proposed plastic bag measures on trash can liner sales in those countries.
In the U.S., Seattle, Washington will require certain stores to charge 20 cents per plastic bag starting in January 2009. A Seattle study found that 5% of people who use plastic bags would increase their consumption of trash can liners if stores began charging for the bags.
San Francisco, California, and Westport, Connecticut have banned the distribution of plastic bags. Westport's ban will start in March 2009. The Westport assistant town attorney says that town did not study the impact of the ban on trash can liner sales, nor does the ordinance require the monitoring of these sales. San Francisco officials have not responded to our queries.
For more information on plastic bag bans and fees, please see OLR Reports 2008-R-0607 and 2008-R-0421, respectively.
EXPERIENCE OF JURISDICTIONS WITH PLASTIC BAG FEES
Irish Plastic Bag Levy
Ireland imposed a 15 cent tax (the equivalent of about 24 U.S. cents) on plastic shopping bags on March 4, 2002. Revenues from the tax are used for waste management, recycling, and other environmental initiatives.
Ireland's tax applies in shops, supermarkets, service stations, and all sales outlets. It applies to all plastic bags except for: (1) small bags used to store such non-packaged goods as dairy products, fruit, vegetables, nuts, and confectionary; (2) bags used to store fresh meat, fish, and poultry; (3) reusable plastic bags, provided the retailer charges at least 70 cents (US $1.11) per bag; and (4) bags supplied to passengers in airports and on commercial aircraft and ships.
Before Ireland imposed the tax, the government estimated that retail outlets gave away more than 1.2 billion bags each year. According to the Irish Department of the Environment, Heritage & Local Government, the tax caused the use of plastic bags to drop from 328 to 21 per person. In 2007, after per capita bag use rose to 31, the government raised the tax to 22 cents (about 35 U.S. cents). According to the department's Sean O'Suilleabhain, the tax has so far raised 117 million Euros (about $152.4 million).
O'Suilleabhain's department does not keep statistics on sales of bin liners. He notes in a December 10, 2008 letter that while newspapers have reported that bin liner sales increased after the tax was imposed, it is difficult to compare pre-tax and post-tax sales because no one provided information on the number of trash can liners sold prior to the tax (copy of letter attached).
Nevertheless, according to the January 23, 2003 Irish Examiner, Irish retailers noticed “substantial increases in the sale of bin bags, [diaper] bags and pedal bin-liners since the levy was introduced.” According to the article (copy attached) Tesco, the country's leading food retailer, had a 77% increase in the sale of foot-pedal bin liners. Other bin liner sales increased by 75%.
The article also states that one Irish plastic bag company was employing double shifts of workers to keep pace with a 300% to 400% increase in demand. “It's been phenomenal. You can trace it back to last March when the bag levy came in,” the company's business manager stated.
Studies of the impact of proposed plastic bag taxes in both Scotland and Australia relied in part on the Irish experience in projecting increased use of trash can liners in those countries.
A 2005 research report (available on-line at http://www.scotland.gov.uk/Publications/2005/08/1993102/31039 used Ireland's reported 77% increase in bin liner consumption to project that a similar increase in Scotland would see bin liner consumption jump from 118 million to (1) 208 million a year if small-to-medium businesses were required to charge for plastic bags, and (2) 181 million if only larger businesses charged for the bags.
The report studied such options as taxing all plastic bags, taxing only those distributed by larger stores, and taxing both plastic and paper bags. In the case of a tax on all plastic bags (including biodegradable ones) the report assumed that plastic bag use would fall 90%, as it did in Ireland. This would result in a decrease in annual plastic bag consumption from 6,200 to 620 metric tons, or 5,580 metric tons. However, this would be somewhat offset by the projected 77% increase in bin liner sales, increasing the estimated cumulative weight of bin liners from the current 1,764 metric tons to 3,122 metric tons, or 1,358 metric tons.
The study estimated that if a tax was imposed on all plastic bags the annual cost to Scottish consumers of buying additional bin liners would be ₤ 4.34 ($6.50).
The Australian study, which can be found on-line at http://www.environment.gov.au/settlements/publications/waste/plastic-bags/analysis.html, relied in part on the reported 77% increase in Irish trash can liner sales. The Australian study assumed increases in trash bag liner sales of between 50% and 80%, depending on which of various tax scenarios were implemented.
The Seattle city council voted July 28, 2008 to approve a 20-cent “green fee” on disposable shopping bags that grocery, drug, and convenience stores provide to customers starting January 1, 2009. The proposal exempts bags used for (1) bulk items, such as fruit, vegetables, nuts, candy, or hardware; (2) potentially wet items, such as frozen foods, meat, flowers, and plants; (3) prepared foods or bakery goods; (4) prescription drugs; (5) laundry dry cleaning; and (6) newspapers. It also exempts bags sold in packages that are intended for garbage, pet waste, or yard waste disposal. Seattle estimates the fee would cause disposable bag use to decrease by 70% at stores required to impose the fee (50% overall) and that it will generate about $10 million annually.
A study conducted for Seattle Public Utilities estimated the number of people who would buy more plastic garbage bags if (1) plastic bags were banned, (2) a fee was charged for plastic bags, or (3) a fee was charged for both paper and plastic bags. It found that 10% of those using plastic bags would increase their use of garbage bags if plastic bags were banned; 5% would increase their use of garbage bags if a plastic bag fee was imposed; and 7% would increase their use if the fee covered both paper and plastic bags. The Seattle study is available on line at: http://www.seattle.gov/util/stellent/groups/public/@spu/@csb/documents/webcontent/spu01_003999.pdf.