Thursday, February 14, 2008

Ireland's Plastic Bag Tax

In an important scene from the 1999 movie American Beauty, two characters—Jane and Ricky—watch footage of a plastic bag dancing in the wind. That there's beauty all over the place, even in garbage, seems to overwhelm Ricky: "Sometimes there's so much beauty in the world, I feel like I can't take it, like my heart's going to cave in."

Unlike Ricky, Dubliners have to live without the heartbreaking splendor of airborne garbage. Plastic bags nearly disappeared from Ireland's cities after the government began taxing them in 2002. The tax, 33 cents per bag, was enough motivation for most shoppers to replace plastic bags with reusable cloth bags. Ireland's experience illustrates a basic principle of taxation: if you want less of something--like the not-so-biodegradable, sewer-clogging plastic bag--tax it. Read Elisabeth Rosenthal's New York Times article to learn more about Ireland's bag tax.

Discussion Questions

1. There's nothing like a green tax to bring out our inner-environmentalists. As Rosenthal points out, after the tax passed, plastic bag use became socially unacceptable in Ireland. In what way does the tax lower the barrier to adopting a disapproving attitude toward plastic bag use?

2. Ohio issues yellow and red license plates to drivers convicted of drunk driving (apparently, Ohio officials didn't give much thought to tourists from the great state of New Mexico). Can you think of other situations or even laws that are governed largely by the threat of disapproval from others?

3. How is the Irish government's campaign against plastic bags similar to government campaigns against tobacco? In what ways do cigarette and plastic bag taxes increase efficiency for society as a whole?

4. Taxing bad behavior can be good, but implementation and enforcement are issues. It'd be relatively easy to cut down on paper waste from ATM receipts because the fee can be collected electronically at the site of the transaction. Why does a plastic bag tax that works remarkably well in the digitized supermarkets of Ireland run into implementation problems among the vendors and mom and pop shops in China?

Labels: Taxes, Incentives, Market Failure, Externalities, Environment

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  • At 2:14 PM, May 03, 2008, Blogger ltsay said…

    I believe that the statements made in this article are very true. If you want to decease the demand for an item then just put a tax on that item. People will certainly stop using that item or use it less. A higher price equals a decrease in demand. A tax is really just a higher price than the original price, therefore, a tax is a good way to decrease the demand.

  • At 2:36 PM, May 03, 2008, Blogger ltsay said…

    The Irish campaign against plastic bags and the governments campaign against cigarettes are similar because they are both trying to prevent things that are harmful. Plastic bags are harmful to the environment because people dispose of them and they end up either in the sewer systems, the dump yard, or in the ocean. Cigarettes, too are harmful. They can harm the person smoking them or people around them by lung cancer or other diseases or sicknesses caused by cigarettes. Taxes on both cigarettes and plastic bags can cause an increase in efficiency because there will be a lesser demand on those items that cause harm to the economy and the people. With less of those items then the econonmy can be more efficient with healthier people and more economic friendly materials.

  • At 7:44 PM, May 04, 2008, Blogger Unknown said…

    I recently wondered if taxing other disposable products that are constantly adding to our landfills would cut down on their use. For instance, what if the government placed a tax on paper towels? Would more people turn to using re-usable cloth towels instead? What about the paper cups that you use every time you go to a fast food restaurant or your local Starbucks? I think that what it really boils down to is the trade off for money spent to convenience. Because of the tax on plastic bags, it became commonplace in Ireland for people to use cloth bags, which is better for the environment and ends up saving them money in the long run. I lived in Germany for several years, and they too charge a few euro cents for one of the stores paper bags, so most people would bring their own canvas bags. The American in me found it to be inconvenient, so most of the time I would just pay for the bag anyway, and it ended up right in the trash. I hear so many Americans talking about buying environmentally friendly cars, but they could not tell you where their nearest recycling center is. It comes down to the almighty greenback. If gas prices weren’t approaching four dollars a gallon, it would not be so tempting to buy a hybrid. I think that if the government placed a burdening tax on paper towels, cups, plastic bags and other products that we take for granted, we would all be a little more green. They could even take it a step farther and tax companies for the amount of packaging they use for their products. I bought a ten-snack-pack of peanut butter crackers yesterday. Ten individual packages, a piece of white cardboard in every pack (for “structural integrity” I imagine), then each pack wrapped in foil, all ten packs in a shallow half a box, wrapped in plastic, and when I checked out the cashier placed it in another plastic bag for me, and threw in my paper receipt. Even if I had brought a canvas bag with me to the store, my purchase is certainly leaving a mess of waste somewhere. If we could just make cars that ran on our trash, that would solve all of our problems.


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