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updated: 11/16/2016 1:14 PM

New Chicago bag tax will boost revenue, but will it cut waste?

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  • A man carries single-use bags in Sacramento, California. Voters in California last week affirmed a ban on such bags.

    A man carries single-use bags in Sacramento, California. Voters in California last week affirmed a ban on such bags.
    Associated Press

 
By Alejandra Cancino
Better Government Association

A 7-cent a bag tax the Chicago City Council approved today as part of a new city budget has its roots in Ireland, where lawmakers in 2002 imposed a levy on environmentally unfriendly plastic bags that dramatically reduced their use and curbed litter.

But the plan pushed by Chicago Mayor Rahm Emanuel appears a breed apart from the Irish model, or for that matter an array of municipal copycat bag taxes that have swept the U.S. in recent years. Critics contend it is designed more to fill a budget hole than unburden landfills of material that won't easily decompose.

The evidence for that argument is multifaceted. The Chicago tax, which will apply to paper as well as plastic, is far lower than the 30-cent a bag charge that successfully curbed behavior in Ireland, raising questions about whether shoppers at grocery and retail outlets will view it more as an annoying trifle than a penalty to actively avoid.

What's more, the proceeds from the Irish tax as well as some of those imposed in U.S. cities are channeled into special funds that underwrite environmental programs. Not so in Chicago, where most of the $12.9 million expected to be raised next year will go straight into the city's precariously balanced main checking account.

The bag tax fits neatly into a growing category of levies imposed with the stated goal of modifying and curbing undesirable behaviors.

Just last week, the Cook County Board passed a penny-an-ounce tax on sweetened drinks. The county beverage tax is expected to raise about $221 million in its first year of full implementation and, like the city's bag tax, the proceeds will go into the county's strapped general fund.

Both Emanuel and his mayoral predecessor, Richard M. Daley, went all in on installing red light and speed camera devices across the city in what they said were drives to improve public safety.

Those safety benefits have been the subject of intense public debate, but what is clear is that the cameras have annually netted tens of millions of dollars in traffic fine revenue.

The city maintains that its latest efforts are green at heart.

"Ultimately, the goal of the (bag) tax is to change behavior and change how people utilize disposable bags," said Molly Poppe, Office of Budget and Management spokeswoman.

Yet, as part of a compromise with retailers, Chicago is reversing a 16-month-old ban on thin plastic bags. The "single-use" totes were replaced with paper bags and thicker plastic bags designed to be used 125 times and carry, at least, 22 pounds.

Retailers argue those two options are more expensive and didn't change consumer behavior. Now, the city says the ban was a failure.

"The problem, or complicated factor, is that the city of Chicago sees this as an opportunity to create revenue to support services," said Jordan Parker, founder of Bring Your Own Bag Chicago, a grass-roots environmental group that pushed for the bag ban and supports the tax.

Usually retailers are opposed to one-off taxes on goods. But Emanuel is allowing them to keep 2 cents from the tax, which means they stand to make $3.7 million from shoppers next year.

"We wouldn't generally be for fees; we generally aren't for taxes," said Tanya Triche, vice president and general counsel for Illinois Retail Merchants Association. "But this is a fix to an ordinance that has cost retailers a lot of money and eventually consumers, because we pass those costs along."

Four years ago, the American Progressive Bag Alliance, a lobbying group representing the plastic bag industry, nearly succeeded at getting the state to approve a law that would have prevented bag bans, taxes or fees. But the effort ended at the hands of then-Gov. Pat Quinn, whose veto was pushed by environmentalists and Grayslake teen Abby Goldberg, who was running a campaign titled "Don't Let Big Plastic Bully Me."

Environmentalists argue plastic bags end up in landfills, where they take hundreds of years to breakdown. What's more, a portion find their way into waterways and put marine life at risk. The plastic bag industry points out that bags make up a tiny percentage of the waste stream and shoppers can recycle them at some grocery and retail stores.

Politics aside, critics of "excise" taxes, the experts' name for levies on specific goods, contend that they are regressive, meaning low-income people spend a bigger chunk of their wages on them. Chicago carved out a bag tax exemption for people receiving food assistance. But that's no relief for people whose income is too high to qualify for such help, but still have a hard time making ends meet.

Meg Wiehe, state tax policy director at the Institute on Taxation and Economic Policy, a research group based in Washington, D.C., said these one-off taxes on goods exacerbate income inequality. The tax code can't correct the problem, she said, but it shouldn't make the problem worse.

What's more, if the tax works as intended, revenue is designed to fall as less people engage in the "bad behavior." This is why critics also warn against using them to fill budget holes.

On the flip side, some wonder whether 7-cents will be enough to deter shoppers' love for disposable totes.

"This is not the best policy," said Chicago Alderman Joe Moreno, who pushed for the city's bag ban. "We are taking a baby step and we don't need to. We can take an adult step."

Moreno said he tried pushing the mayor to keep the bag ban on thin plastic bags, patch the loophole that allows retailers to give out "reusable" plastic bags, and impose a 10 to 15 cent tax on paper bags. But, he said, he was alone in his battle.

Tatiana Homonoff, an assistant professor of economics and public policy at New York University who has studied bag taxes, said a small tax won't have an effect on 100 percent of shoppers. But that's probably not the goal. Policymakers, she said, are providing an incentive for those who just need a nudge to switch to reusable bags.

And research shows that a charge of just a few cents achieves that goal.

Others will carry-on, undeterred.

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