Policy Documents

Research & Commentary: Pennsylvania Plastic Bag Tax

October 9, 2013

Under a proposal by state Sen. Daylin Leach (D-Wayne), Pennsylvania would become the first state to impose a statewide tax on the use of plastic bags. According to the Pittsburgh Tribune-Review, eight other states—Hawaii, Louisiana, Maine, New Jersey, New York, Rhode Island, Vermont, and Washington— are also considering plastic bag taxes.

Under the proposal, consumers in Pennsylvania would be charged two cents for each single-use plastic bag they receive from large retailers. The funds raised by this tax would be divided equally between the store and the Pennsylvania Recycling Fund. On his Web site, Leach argued his tax “would encourage consumers to shift away from using inefficient plastic shopping bags by imposing a $0.02 fee for each bag provided by a retail establishment.”

Despite the noble goals of this new “sin” tax, laws regulating plastic bag use have several major flaws. When a similar tax was implemented in Washington, DC in 2010, the revenues generated by the tax were lower than expected. According a study conducted by the Beacon Hill Institute, the plastic bag tax in DC could 100 local jobs and cut aggregate disposable income by $5.64 million in 2011. The results applied to an entire state could be exponentially worse. The study also found DC will lose approximately $602,000 in investment and $108,340 in sales tax revenue as a result of the tax.

Although reusable cloth bags appear to be the most efficient way to transport goods with minimal environmental impact, recent reports show this may not be true. A study conducted in the United Kingdom found grocery shoppers would have to use their cloth bags approximately 131 times to realize the benefits that critics of plastic bags claim. The study also found reuse of plastic bags greatly reduces their environmental impact. A 2007 survey by the American Chemistry Council found 92 percent of consumers reuse plastic bags, indicating they may not be the environmental threat critics claim they are.

Reusable cloth bags also may present a public health risk due to the potential contamination of the bags by food-borne bacteria. A 2012 study by Jonathan Klick and Joshua Wright found evidence the reusable bags may contain potentially harmful bacteria. Klick and Wright examined emergency room admissions related to these bacteria after plastic bags were banned in San Francisco and found ER visits spiked when the ban went into effect, and compared to other counties, ER admissions in San Francisco “increase by at least one fourth, and deaths exhibit a similar increase.”

Pennsylvania legislators should consider the negative effects and limited value of plastic bag taxes before implementing them. The taxes are unlikely to generate the revenue their sponsors expect, while placing an additional burden on consumers and retailers, having a negligible impact on the environment, and increasing the incidence of food-borne illnesses.

The following documents provide additional information about plastic bags and taxes and regulations on them.

Ten Principles of State Fiscal Policy
http://heartland.org/policy-documents/ten-principles-state-fiscal-policy
The Heartland Institute provides policymakers and civic and business leaders a highly condensed, easy-to-read guide to state fiscal policy principles. The principles range from “Above all else: Keep taxes low” to “Protect state employees from politics.”

Pennsylvania Mulls First Statewide Plastic Bag Tax in the U.S. as ‘Small Price to Pay’
http://www.forbes.com/sites/kellyphillipserb/2013/08/22/pennsylvania-mulls-first-statewide-plastic-bag-tax-in-the-u-s-as-small-price-to-pay/
Writing in Forbes, Kelly Philips Erb reports on Pennsylvania Sen. Leach’s plastic bag tax bill: “But if the plan is to push the tax based on curbing behavior and not raising revenue, we should question how we make people feel about those choices. Sin taxes—and that’s what this is, really—are so polarizing. They become a matter of extremes.”

Grocery Bag Bans and Foodborne Illness
http://heartland.org/policy-documents/grocery-bag-bans-and-foodborne-illness
Jonathan Klick and Joshua Wright of the University of Pennsylvania examine the effects of plastic bag bans and the potential for bacterial contamination of reusable shopping bags: “We examine emergency room admissions related to these bacteria in the wake of the San Francisco ban. We find that ER visits spiked when the ban went into effect. Relative to other counties, ER admissions increase by at least one fourth, and deaths exhibit a similar increase.”

State Plastic and Paper Bag Legislation: Fees, Taxes and Bans; Recycling and Reuse
http://www.ncsl.org/issues-research/env-res/plastic-bag-legislation.aspx
States are continuing to consider strategies to reduce the number of plastic carry-out bags from grocery stores and other retail outlets. This article from the National Conference of State Legislators outlines the proposals being considered across the United States.

Study: Reusable Bags an Environmental Loser
http://news.heartland.org/newspaper-article/2011/03/14/study-reusable-bags-environmental-loser
Cheryl K. Chumley writes in The Heartlander digital magazine about a new study from the United Kingdom, titled the “Life Cycle Assessment of Supermarket Carrier Bags,” which casts doubt on the supposed environmental benefits of reusable shopping bags.

Bag Taxes Disappointing in Debut
http://taxfoundation.org/article/bag-taxes-disappointing-debut
Justin Higginbottom of the Tax Foundation examines Washington, DC’s bag tax in this Fiscal Fact piece. Higginbottom argues bag taxes may just be another way for a state or city to grab general revenue.

The Crusade Against Plastic Bags
http://heartland.org/policy-documents/crusade-against-plastic-bags
Kenneth P. Green and Elizabeth DeMeo of the Pacific Research Institute discuss several studies of the effectiveness of plastic bag bans. They conclude most studies suggest banning plastic grocery bags reduces some harms but increases others, as is generally the case with other poorly thought-out environmental interventions.

The Impact of Bill 18-150 on the Economy of Washington, D.C.
http://heartland.org/policy-documents/impact-bill-18-150-economy-washington-dc
In this study of Washington, DC’s bag tax, the Beacon Hill Institute found the tax will have a negative impact on the local economy. The report found consumers will allocate a portion of their spending to the bag tax or divert spending outside DC to avoid it—both of which will reduce consumption spending in DC. As a result, businesses along the entire retail supply chain experience a reduction in sales and profits, and they, in turn, reduce their employment and investment expenditures. Lower levels of employment and investment reduce income from wages and capital investment.

Research & Commentary: Plastic Bag Bans
http://heartland.org/policy-documents/research-commentary-plastic-bag-bans
This Heartland Institute Research & Commentary examines plastic bag bans and their effects on both the economy and the environment: “Market advocates point out plastic bag bans infringe on the right of businesses to offer their customers a desired convenience, impose the values of one group on another, and remove individuals’ freedom to choose which product best fits their personal needs and circumstances—all for no appreciable effect on the environment.”

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit The Heartland Institute’s Web site at http://heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.

If you have any questions about this issue or The Heartland Institute, contact Heartland Legislative Specialist Matthew Glans at 312/377-4000 or mglans@heartland.org.