Soon at a Grocer Near You: $0.05 Bag Tax...



Plastic Bag in Creek

One of the cool things about living near Washington, DC is that we’re so close to a cultural mecca that contains dozens of museums, historical landmarks and monuments which really add to the quality of life.

However, one of the crummy things is that we’re also trapped in the vortex of a tax-and-spend polity that tends to test certain taxation ideas here before they spread to a larger scale, which really subtracts from the quality of life.

The latest example of just such a tax-periment is a $0.05 tax assessed on each plastic or paper bag that’s given to a consumer at grocery stores within the D.C. metro.  Last year this "bag tax" raised an extra $2 million dollars for the cash-strapped city and is being roundly heralded as an innovative “revenue stream” for other municipalities to duplicate.

Since we live in an adjacent county, our county executive has proposed extending the bag tax here.  His rationale is that the projected $1.5 million that this new tax will “generate” (a.k.a wealth redistribution or sanctioned theft) will go toward cleaning the rivers and streams within Montgomery County.

Apparently, that’s necessary since a local environmental group claimed that it has single-handedly removed 14,000 plastic grocery bags from county streams during the past two years - accounting for more than 33 percent of the total amount of litter within the county’s waterways.

Don’t misunderstand me, I’m pro-environment and clean water as well as in full support of reducing, reusing and recycling. However, I think the environmental group’s bag numbers are a bit skewed, but even if they’re spot on there’s no way you can convince me that the county should spend $1.5 million a year to pick up 7,000 errant grocery bags. 

That equals out to more than $214 to pick up one bag!!!  Heck, I’ll quit my gig and do it for $75 per bag…

Despite those upside down economics, there’s the more important issue of timing. Last time I checked, our national economy was still limping its way toward a lackluster, false-starting recovery. This $0.05 tax might not see like a lot but in light of rising fuel and food prices, coupled with growing credit debt and personal bankrupties, it could be the fiscal bag around the consumers’ head that suffocates growth.

In fact, a recent study from the Beacon Hill Institute at Suffolk University in Massachusetts found that the D.C. bag tax had a negative impact on the local economy. Specifically, the study found that customers consciously bought fewer goods so they used fewer bags.  Ultimately, the unintended consequence of this bag tax seems to be a counterproductive stifling of consumer confidence.  Yeah, that's exactly what the economy needs.....

Again, reducing and recycling are laudable efforts but taxing grocery bags would be laughable if it wasn’t so financially deleterious to a fragile economy.  As such, the bag tax needs to be bagged, but it’s highly unlikely that common sense will win the day – so it may soon be on its way to a checkout counter near you.