A Nationwide Plastic Bag Tax and the US Economy

by Kendall Quirk

Cover Photo Credits

The New York Times recently reported on the strict ban on plastic bags Kenya recently adopted—four years in jail or a hefty fine of $19,000 for importing or manufacturing plastic bags. Countries all over Europe and Asia are adopting similar policies to reduce the use of plastic bags. England implemented a 5 pence tax per bag bought, giving customers incentive to use reusable bags. The EPA reports that the United States alone uses 380 billion plastic bags every year, requiring 12 million barrels of oil to create, and only 5 percent of these plastic bags are recycled. Most plastic bags find their way into the environment, hurting or killing animals, largely in our waterways. While many cities in the United States have adopted plastic bag taxes or bans, are there economic benefits to a nationwide plastic bag tax policy implementation?

Kenya’s approach to a national plastic bag ban is on the more extreme end, immediately and drastically decreasing the supply and quantity demanded in the country to almost zero. However, with an approach similar to the taxation policy in England and some large U.S. cities, the plastic bag economy would not change so extremely in such a short amount of time. At the moment, my hometown of Arlington, Texas does not have any plastic bags regulations, but implementing a 5 cent tax would change the consumer’s preferences. Currently, the demand for plastic bags in Arlington is very elastic. Most consumers leave the store with a cart full of purchases bagged in the grocery store supplied bags, not their own.

After living in central London for a summer, where there is a tax on plastic bag, I noticed a difference in my habits when I went to the grocery store. England implemented a 5 pence tax on plastic bags in October 2015 and saw an 85% decrease in the usage of plastic bags within the first year. The 7 billion bags that were used before sharply declined to 500 million just in the first 6 months. Since the tax revenue from the plastic bags went directly to the retailer, retailers and other businesses benefitting from the tax were more likely to donate this additional income to charity. With such huge donations from major retailers, the plastic bag tax gave back to consumers and citizens, while also cutting down on plastics used.

England’s main reason for implementing this tax, similar to the reason why many other countries also adopt a plastic bag regulation, was to help reduce plastic waste in oceans and the environment. Eight tons of plastic is dumped into oceans each year killing marine life and damaging the habitats they need to survive. By increasing the consumer incentive to bring and purchase renewable bags, the number of plastic bags in the ocean each year will decrease.

Before walking into a grocery or retail store, many consumers do not think about the effort and damage that an everyday item such as a plastic bag causes, therefore the demand for these items will not decrease unless alternative incentives are put into place. 5 cents, although not a huge tax, will eventually add up at the end of a weekly grocery haul for a family. In Washington, D.C., D.C. Code mandates that revenue from the plastic bag tax goes toward the Anacostia River Clean Up and Protection Fund. These types of programs in the United States reflect the work companies in other countries are already doing. With companies donating revenue that previously did not exist to programs trying to reduce plastics in the environment, the plastic bag tax is an effective and efficient policy to reduce oil consumption and plastic waste while encouraging ecofriendly and less costly bagging methods.