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Montgomery County’s ‘Bag Tax’ Fails to Deliver Promised Reductions

Posted: July 12, 2016 at 11:50 am   /   by   /   comments (0)

Mark UncapherBy Mark Uncapher

When the Montgomery County Council and County Executive imposed a 5-cent levy on disposable shopping bags in 2012, the claim made was that their fee was not really a nuisance tax, but a way to encourage consumers to use more recyclable bags.  At the time the county officials promised their charge would result in a 60% reduction in disposable bag usage.

Using new county data, Bill Turque in The Washington Post recently updated the status of Montgomery County’s disposable bag tax.  In fact, after a slight decrease of barely one quarter of 1% between 2013 and 2014, bag use increased by 2.8% between 2014 and 2015.   Even adjusting for population changes, Montgomery County’s plastic bag use continues to climb.

The new data directly contradicts the claims made by environmental advocacy groups such as Trash Free Maryland and the Alice Ferguson Foundation that we experienced “a 50% decline in plastic bags in Montgomery County in the first year after the Montgomery bag fee went live.”

When Washington, DC implemented its own bag fee, District officials claimed an 80% drop in usage during the first year, from 270 million to 55 million.  However the same officials also acknowledged that they had no idea about how many plastic and paper bags were being used before the taxes took effect.  Their baseline number was wildly exaggerated, assuming that seven times as many bags were being distributed per capita as in Montgomery County.

Turns out the bag tax always was what it seemed to be, a tax.  In the most recent year, Montgomery County collected taxes on 60 million bags.  Since going into effect, more than $10 million has been collected for over 200 million bags.

Given that some Maryland legislators want to extend the bag tax statewide and increase the charge to 10 cents, the Montgomery County’s tax’s failure to reduce plastic bag use is a good opportunity to reexamine the assumptions behind the policy.

According the prominent think-tank, the National Center for Policy Analysis (NCPA), plastic bags are actually better for the environment than reusable bags. “Reusable bags need to be used 104 times to be less polluting than plastic bags. However, such bags are used only 52 times on average.”  Unlike the “seat of the pants” thinking that went into Montgomery County’s bag tax, NCPA considered the full life-cycle environmental impact, including initial manufacture.

NCPA was also able to measure the impact of a ban on plastic bags on shopping. When the City of Los Angeles banned plastic bags, the unincorporated areas of Los Angeles County were not covered by the law.  The retail sales impact was significant. Examining the overall change in sales among the two groups (incorporated LA versus unincorporated LA County), NCPA found:

  • Stores in areas not covered by the ban experienced an increase in sales of 3.4%.
  • Stores in areas covered by the ban reported a decline in sales of –3.3%.

Not only do consumers not change their behavior when faced with a bag tax, if denied access to them, they will also change where they shop.  Higher Maryland taxes, especially on gasoline and alcohol, have already had a significant impact by shifting retail sales to jurisdictions such as Virginia and Delaware.

Add the bag tax to the already long list of anti-business policies the County Council imposes on businesses, especially small ones.

For example the county’s $133 million energy tax failed to fully sunset when scheduled.  Business leaders warned the Council that the tax unfairly forces businesses with small profit margins to pay 20 times more than non-commercial customers.

The county “ice cold business climate list” also includes attempts by several councilmembers to raise the county’s minimum wage to $15 per hour by 2020.  This is on top of the existing increase to $10.75 earlier this month.  Businesses competing across the Potomac in Virginia comply with the Federal minimum wage of $7.25.

Two years ago Maryland voters responded to Larry Hogan’s message to reopen the state for business by reversing the state’s hostile business climate. While the statewide changes are encouraging, Hogan’s “Change Maryland” mandate has yet to impact the Montgomery County Council chamber.