To ban or to tax? 'Tis the question for plastic bag legislation

[This article has been corrected to reflect the fact that plastic bag recycling rates are between 5 percent and 10 percent. GreenBiz regrets the error.]

In the United States, the vast majority of cities and states have opted for a ban on plastic bags, often finding that any proposed “tax” is politically untenable and unpopular with retailers. Outside the United States, however, plastic bag taxes have been viewed as the business-friendly option, with retailers happy to pocket a percentage of the fees charged for single-use bags or to profit from increased sales of reusable bags.

On the environmental front, the jury is still out as to whether bans or taxes are more effective in the reduction of plastic bag usage and littering, but a recent study of the plastic bag tax in Wales can be seen as a win for tax proponents. It shows a 96 percent reduction in the usage of plastic bags since the tax was introduced in October 2011.

Ireland was similarly successful with its bag tax, instituted in 2002, which delivered a reported 90 percent reduction in plastic bag usage within a few months of its inception. Based on the success of the Irish and Welsh bag taxes, Northern Ireland is introducing a tax next April and Scotland recently proposed a tax as well.

Bag taxes have been successful elsewhere in Europe, and in India and China as well. “Hong Kong has taxed plastic bags for quite a few years and the policy has proven to have virtually no impact to retail business,” says Jason Chan, a Hong Kong native and consultant with International Enterprise Singapore (Singapore’s trade development board). “Consumers won't refrain from shopping at their favorite retailer just because of the innocent shopping bags policy and certain retailers started selling environmental friendly recyclable foldable shopping bags.”

San Francisco—the first city in the United States to ban single-use plastic bags—started out wanting to tax them. A proposed 17-cent tax on plastic bags was declared illegal, and so the city moved to ban them instead. That set a precedent for the rest of the state and, eventually, the country. In California, where a new municipal bag ban is seemingly passed every month, the latest round of bans tend to include a fee imposed on paper bags as well.

The inclusion of paper bags is a response to various lawsuits against California plastic bag bans. The lawsuits, brought by plastic bag proponents, sought to use an aspect of the California Environmental Quality Act (CEQA) – namely that no piece of environmental legislation have unintended negative impacts  (in this case, a ban on plastic bags could increase the use of paper bags, thereby harming the environment) – to repeal bag bans.

Photo of plastic bags provided by Thorsten Rust via Shutterstock

Next page: One city that bucked the ban trend