July 24, 2008
PLASTIC BAG FEES
By: Paul Frisman, Principal Analyst
You asked if any state or municipality requires grocery stores to charge customers a plastic bag fee which is then used to fund environmental programs.
In the U.S., Seattle, Washington is in the final stages of requiring grocery, drug, and convenience stores to charge 20 cents for each disposable shopping bag (plastic or paper) they provide. The city plans to use the revenue for solid waste prevention and recycling. The California legislature has before it a proposal to require stores that do not meet plastic bag recycling goals to charge a 25-cent fee for the plastic bags they distribute, and the Los Angeles City Council has voted to ban plastic bags in that city by July 2010 if the state does not impose the 25-cent fee. A Massachusetts proposal to impose a gradually increasing fee on plastic bags, half of which would be returned to the store to improve recycling practices and provide educational material, apparently died in May 2008. Maine considered, but did not adopt, a plastic bag fee earlier this year.
Other countries have considered or are considering similar measures. Ireland in 2002 became the first country to require that retail stores charge for plastic bags. Scotland has considered a similar program, the British government has indicated it may require supermarkets to charge a plastic bag fee, and Australia plans to begin a pilot program in several cities this summer. More information on these and other international initiatives can be found at: http://www.scotland.gov.uk/Publications/2005/08/1993259/33019
The Seattle city council's Environment, Emergency Management and Utilities Committee voted July 22, 2008 to approve a 20-cent “green fee” on disposable shopping bags that grocery, drug, and convenience stores provide to customers starting January 1, 2009. These stores are responsible for about three-quarters of the disposable bags distributed annually in Seattle. The full council is to vote on the proposal on July 28.
The proposal exempts bags used for (1) bulk items, such as fruit, vegetables, nuts, candy, or hardware; (2) potentially wet items, such as frozen foods, meat, and flowers and plants; (3) prepared foods or bakery goods; (4) prescription drugs; (5) laundry dry cleaning; and (6) newspapers. It also exempts bags sold in packages that are intended for garbage, pet waste, or yard waste disposal.
The fee would be added to shoppers' bills and printed on their receipts. Under the proposal (attached), stores with annual gross sales of $1 million or more would remit to the city 15 cents of each 20 cents they collect, keeping five cents to cover their costs. Stores with less than $1 million annual revenue would be able to keep all the money they collect. According to newspaper accounts, the council committee added a requirement that Seattle Public Utilities (SPU) prepare a plan to ease the fee's impact on low-income families. SPU also will study the fee's cost to businesses (“Council Panel OKs Bag Fees,” Seattle Times, July 23, 2008).
Seattle estimates the fee would cause disposable bag use to decrease by 70% at stores required to impose the fee (50% overall) and that it will generate about $10 million annually. The city plans to use $8 million of the $10 million for waste prevention, recycling programs, and environmental education. The remainder would be used for collection and enforcement costs, promoting the switch to renewable bags, and underwriting the distribution of free, reusable plastic bags.
According to the SPU website, http://www.seattle.gov/util/stellent/groups/public/@spu/@csb/documents/webcontent/spu01_003527.pdf, Seattle is considering requiring a fee, rather than banning plastic bags, because of concerns a ban would encourage people to use more paper bags, which require more energy to produce and recycle.
Under Assembly Bill (AB) 2449, passed in 2006, certain California stores must provide on-site drop-off recycling for grocery and merchandise bags. The law applies to (1) supermarkets with gross annual sales of at least $2 million and (2) retail stores with (a) more than 10,000 square feet of retail space that generates sales tax and (b) a licensed pharmacy. AB 2449, which expires in 2013, bars California cities, counties, and public agencies from charging a fee for plastic bags.
In April 2008, a California legislative committee rejected one plastic bag proposal (AB 2829) which would have imposed a statewide 25-cent per bag fee, but approved another (AB 2058). The latter bill prohibits a store, starting July 1, 2011, from providing customers with free plastic bags unless it can show a 70% increase in the number of plastic bags it recycled. A store that does not meet this requirement must charge at least 25 cents for each plastic bag it provides. It must show that it uses most of the revenue it collects to reduce plastic bag litter and clean up and recycle plastic bags. The bill is now before the legislature's Appropriations Committee.
Los Angeles City Council Proposal
The Los Angeles City Council voted on July 22, 2008 to ban the use of plastic bags at all supermarkets and retail stores by July 2010 unless the state legislature votes to impose a 25-cent per bag fee (“LA City Council votes for ban on plastic shopping bags,” Los Angeles Times, July 23, 2008.)
State Senator Brian Joyce proposed Senate 2521, (http://www.mass.gov/legis/bills/senate/185/st02/st02521.htm) calling for retail stores that gross more than $1 million a year to charge customers a gradually increasing fee for plastic bags. The fee would start at 2 cents per bag, and increase to 15 cents in annual two-cent increments. The bill accompanied a study order on May 1, 2008, apparently killing it for the current legislative session.
In March 2008, Maine legislators failed to pass a tax on plastic bags, instead adopting a joint resolution encouraging the public to reduce the use of disposable plastic bags by 50%.
Irish Plastic Bag Levy
Ireland imposed a 15 cent tax (the equivalent of about 24 U.S. cents) on plastic shopping bags on March 4, 2002. According to the Irish Department of the Environment, Heritage & Local Government, the tax caused the use of plastic bags to drop from 328 to 21 per person. In 2007, after per capita use rose to 31, the tax was increased to 22 cents (about 35 U.S. cents). Revenues from the tax are deposited into the nation's Environment Fund for waste management, recycling, and other environmental initiatives. The levy had raised 75 million Euros (about U.S. $119 million) by early 2007.
Before Ireland imposed the tax, the government estimated that retail outlets gave away more than 1.2 billion bags each year. The government states that plastic bag litter has dropped by 95% since it imposed the fee.
Ireland applies the charge at the point of sale in shops, supermarkets, service stations, and all sales outlets. The charge is itemized on all receipts. It applies to most plastic bags, including paper bags with a plastic laminate coating. Exempt from the charge are: small bags used to store such non-packaged goods as dairy products, fruit, vegetables, nuts and confectionary; bags used to store fresh meat, fish, and poultry; plastic shopping bags designed for re-use, provided the retailer charges at least 70 cents (US $1.11) per bag; and bags supplied to passengers in airports and on commercial aircraft and ships.
Scotland and the United Kingdom
A proposal to levy a fee of 10 pence (about 20 U.S. cents) per plastic bag was introduced in the Scottish Parliament in 2005, and later withdrawn. However, Mike Pringle, the Scottish Member of Parliament who introduced the original initiative, said in March 2008 he will reintroduce the measure.
British Prime Minister Gordon Brown indicated in February 2008 that he might require supermarkets to charge five pence (about 10 U.S. cents) per plastic bag if they do not voluntarily begin charging customers for the bags they use (“Brown May Legislate Against Free Plastic Bags,” The Guardian, February 29, 2008).
The Australian state of Victoria will begin a pilot program in August 2008 in which major supermarkets in three towns will charge 10 cents per bag. Proceeds will be spent on community education and local environmental projects. The pilot program is a joint initiative of the Victorian government and the Australian National Retailers Association.