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  • A Bag Idea: DC’s Newest Tax Hurts Businesses, Consumers

    Grocery bag

    DC lawmakers tried to sugarcoat the five cent per bag tax on store bought items, calling it a fee rather than a tax. The tax has been in effect in the District of Columbia since New Year’s Day. Stories in the Washington Post, the Wall Street Journal, and other media have reported of widespread disaffection with the tax among people in DC. The lawmakers behind the tax surely do not understand economics. Furthermore, the legalese used to draft the law would provoke laughter if it was not so deserving of condemnation.

    Consumers must pay five cents per bag on any item bought in a store that sells food. The founders of this great country would question the logic to the law because it makes no sense. For the infraction of stepping foot in our Nation’s Capitol, and having the gall to buy something, you must pay to clean up the Anacostia River. Furthermore business owners are prohibited by law from paying the tax for you. It would only make sense to a person who sees all economic activity as an opportunity to siphon off money for the nanny state.

    The problems with the tax are many.

    • People are shopping in Virginia and Maryland for their groceries instead of DC and are being inconvenienced.
    • Small, irrational taxes such as this one often start off small, but grow larger and are never retired. If the Anacostia River was to become a pristine nature preserve, this tax would not disappear if history is any indication.
    • Many stores sell a small amount of food but mostly non-food items. They are being encouraged to end the food side of their enterprise, or hurt their business. This is an affront to their freedom to transact as they choose.
    • The DC Council member, Tommy Wells, who sponsored the bill apparently doesn’t understand that he is injecting himself in between every private-market food sales transaction in the city. The business owners have every right to have a bone to pick with him as he is alienating their customers. Wells though said, “I have not heard it being a hardship on retail establishments. There has been some customer concerns, but it seems since the fee is charged to the customer and not the business, that really doesn’t make any sense.”
    • Then, there are the true victims of the tax, the Washington DC local grocery store, and restaurant owners, and the poorer residents of DC who can travel less easily to nearby states to shop. The grocery store owners and fast food franchisees in DC are entrepreneurs who run their own businesses in a country where they are free to do so. Now the DC government is piling on one more regulation in an already tangled pile of regulations onto the backs of the DC entrepreneurs. It’s too much.

    The biggest losers as a result of the tax, if not the business owners who may have to close up shop, are the poorer residents of DC. To them the dollars they spend on grocery bags that used to be free really add up. And what are they getting in return for it? Only the promise to clean a river that they did not ask to clean. It is not them, after all, who polluted the river. If people want to clean the river, let them start their own non-profit organization and get those who believe in the cause to go at it or try to find the real polluters of the stream who are not local grocers or people without automobiles.

    Here is the onerous wording of the tax itself:

    Sec. 4. Establishment of fee.

    (a)(1) A consumer making a purchase from a retail establishment shall pay at the time of purchase a fee of $.05 for each disposable carryout bag.

    (2) A retail establishment shall not advertise or hold out or state to the public or to a customer directly or indirectly that the reimbursement of the fee or any part thereof to be collected by the retail establishment will be assumed or absorbed by the retail establishment or otherwise refunded to the customer.

    (3) All retail establishments shall indicate on the consumer transaction receipt the number of disposable carryout bags provided and the total amount of fee charged.

    (b)(1) (A) Each retail establishment shall retain $.01 of each $.05 fee collected; provided, that an establishment that chooses to offer a carryout bag credit program to its customers, as set forth in subparagraph (B) of this paragraph, shall retain an additional $.01 from each fee collected, for a total of $.02 for each $.05 fee collected.

    (B) A retail establishment shall retain an additional $.01 of each $.05 fee for a carryout program which:

    (i) Credits the consumer no less than $.05 for each carryout bag provided by the consumer for packaging their purchases, regardless of whether that bag is paper, plastic, or reusable;

    (ii) Is prominently advertised at each checkout register; and

    (iii) Reflects the total credit amount on the consumer transaction receipt.

    (C) The fees retained by the retail establishment under this paragraph shall not be classified as revenue and shall be tax-exempt for the purposes of Chapters 18, 20, and 27B of Title 47 of the District of Columbia Official Code.

    (D) The fees retained by the retail establishment shall be excluded from the definition of retail sale under D.C. Official Code § 47-2001(n)(2) and from the definition of gross receipts under D.C. Official Code § 47-2761(5).

    (E) The fees to be remitted to the District under subsection (b)(2) of this section shall be added to other tax payments in determining whether the electronic payment requirement under D.C. Official Code § 47-4402(c) applies.

    (2) The remaining amount of each fee collected shall be paid to the Office of Tax and Revenue and shall be deposited in the Anacostia River Cleanup and Protection Fund established by section 6(a).

    (c) The Office of Tax and Revenue shall develop rules for frequency and method for reporting and transmitting the fees, as set forth in subsection (a) of this section, to the District.

    (d) Except to the extent of any inconsistency with this act, the same provisions to Title 47 of the District of Columbia Official Code that are applicable to the gross sales tax shall govern the administration, collection, and enforcement of the fee set forth in subsection (a) of this section.

    Posted in Economics [slideshow_deploy]

    20 Responses to A Bag Idea: DC’s Newest Tax Hurts Businesses, Consumers

    1. Ozzy6900, CT says:

      Oh my God! This is starting to sound like the Colonies and the English Crown in the 1700's!

      How does the DC government get to charge a fee when it is the business that PAYS for the bags? This is unfair taxation and a direct result of Liberal Socialists thinking that they can stick a tax on anything they want. This is one of the things that started the American Revolution and it wouldn't surprise me if things like this don't start an uproar today!

    2. Caitlin, Washington says:

      No one is traveling to MD and Virginia to buy their groceries because of a 5 cent tax on bags. It is very easy to carry reusable bags, which actually hold more groceries and break less often. Even if a family buys 10 bags of groceries, it costs less to buy all those bags than it does to take the bus or metro or to drive to DC and MD.

    3. Steven Bellevue, Neb says:

      I have given up trying to carry on doing business in America. I spent the past 30 years trying to make a living in our America most of which running my own business all the while constantly fighting the IRS as well as both state and federal regulations within my industry. I give up our I can no longer afford or tolerate the unfair laws in place that damage small business…

    4. John G, Washington, says:

      I live in DC, in Mr. Wells' district to be precise. When I first heard about the bill (it was passed in mid-2009 I believe) I called Wells' office to complain. I was told in no uncertain terms that I was the first person to complain and that, actually, residents had been calling to support this tax on themselves.

      When I asked if Mr. Wells had recently supported any other initiatives to curb litter, such as–you know–actually having the police enforce litter laws, I was told no, he hadn't considered that. Why then the tax? The idea behind the tax, I was pointedly told, was not necessarily to raise money for the Anacostia River, but to change people's behaviors. And so the natural question followed: Does Mr. Wells' believe that it is a proper use of the law to change the citizens' legitimate behaviors? Yes, the aide said, it was.

      There you have DC in a nutshell folks.

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    6. Eagle says:

      Toilet tax, government swear jar, opinion tax where you will be taxed if you don't spout the governments line.I say it as a joke, but Calif. is looking at a law against swearing, how you think you can pass something like that, or enforce it, is beyond me. If I lived in that state I would wait till they passed it and then stand in the street and cuss as loud as I could. Then we can talk about the Consitution while they try and enforce the new law.

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    8. Steven Bellevue, Neb says:

      Move out of Washington D.C. if you can find better jobs in well managed cities such as those in Tax Free states. Let Washington D.C. go by the way of cities like horrible Detroit which has similar corrupt politics and social economic problems. Until then form car pools to travel to the nearby stores such as SAMS Club and Walmart outside the Beltway. Let the idiots in the D.C. government know enough is enough!

    9. Rob, Wahsington DC says:

      Caitlin, your view is a very narrow one. Many of us actually do travel out of the district to do grocery shopping now that this tax has been enacted. Some based on principles and some because we all travel out of the city often enough anyway. You also fail to see that many in the city can hardly afford the food they are putting in the bags let alone .99c for a reusable or even .05c for a disposable. Lastly, your view and attitude allow the government to slowly widdle away, impede or otherwise obstruct your freedoms.

      I think it’s time we all review our history and remind ourselves just why we are an independent country. Do we remember a little thing called the Stamp Act or how about the Tea Act? Representation or lack thereof, was NOT the only thing we revolted against. The mere idea of unreasonable taxation was enough to cause riots in the streets. Do we need to get to that point again before our governments realize that taxation is NOT the solution to our economic problems? Or that representation means doing what the people want and not what our elected official’s ideological ideas dictate or what will appease the special interests groups who keep them in office?

      Was Jefferson correct in his letter to Madison when he wrote, "A little rebellion now and then is a good thing."? Is this what its going to take to finally get our government to realize we're fed up with things as simple as a .05 bag tax?

    10. Michael, Missouri says:

      I hope you good people in D.C. start a campaign to stop this! Agreed, a nickle isn't much, and I would have to agree with Caitlin's logic that people arn't going to spend a few dollars in gas to save one. But it's the absurdity of the whole thing! And I would be interested in knowing if "any" of this money is ever spent on a "body" actually cleaning up this river! I would also like to see how many administrative hours are spent on this, and if the river benefits from it at all… Just saying.

    11. Billie says:

      Boy, they're really egging it on, aren't they? Pathetic is, is what pathetic does. Taxation by misrepresentation.

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    13. Paul Vittle United K says:

      I generally admire the 'spirit' of the USA, but why is it that sometimes a group of people spoil that positive image by not being able to see beyond the end of their collective nose? Is it fear of change? Is it an inability to see the bigger picture?

      I am so disappointed that anyone should be so critical of this outstanding effort to actually do something practical to protect our environment for our children and grandchildren. Here in the UK, most people now always take their own bags into shops. It is not rocket science; foldaway bags come in various sizes and can so easily be carried to the shops. It is no different and just as important as the habits we have all developed over recent years, for example, to put on our seatbelts as we get into our cars, or not to smoke in public places. This took a while, but now we do it without thinking and without objectionm?

      Please think again and try not to be so short sighted. Enter into the spirit of this innovation and see whether it is possible to change your habits, change your mind and think a little more of the planet, the future and the potential of having broader horizons.

    14. Billie says:

      It's the money and force over something fictional. It is the drastic measures they are taking and the irrational, impractical dictate they continue to give. The bags used for groceries are recycled or used to contain garbage to keep the inside of the garbage bin clean. Everything else you mentioned we're on the same page…

      it's everything else they're forcing down our throats in the name of government man-made global warming, climate change, weather forecasting, whatever.

    15. Brian, Mpls MN says:

      I don't think anyone in this forum will argue that conserving materials and costs on bags is not a good thing. The problem here is not that. In and of itself, that is just fine. The problem lies in mandating something like this is the slippery slope/can of worms which is now exposed. If taxes are acceptable for grocery bags (ps, why grocery bags and not say, fast food bags?) then why not taxes on plastic candy wrappers, produce bags, dvd cases, milk jugs, and all other packaging in general?

      My point is, why are grocery bags now the isolated "devil" as opposed to all of the other possible wastes?

      Should we go back to the days of returnables? Should I bring in my glass bottle to fill up my milk for the week? Maybe we should just go back to milkmen drivng all over the countryside. Disposable packaging exists for a reason — if not deemed economical by the market, it would not continue. The premium for convenience is a REAL advantage to the market. The same goes for grocery bags. Yes, spread the word about conserving, but mandating stuff like this is freedom infringement.

      If you want to conserve materials, that is your deal — no one is chastising you for doing so; you can do it personally. Lead by example, you may just change some peoples minds. My personal frustration is those who are so preachy about it! If you don't do it, you're now deamonized. If you like the status quo, you have an equal right to that too. Just because something like this makes you "feel good" about the environment doesn't mean it deserves taxing everyone for it. You can find so many parallels of this in society today: Instead of isolating the problem and solution, we marginalize it over the entire population.

    16. CCC, Washington, DC says:

      I went into my local DC Safeway this weekend (in Southeast DC), and well over half the customers brought their own bags. It was clear that the 5 cent tax really does change behavior. Two months ago in the same grocery store, around 5% of people brought their own bags. In addition, as someone who has volunteered to clean up the Anacostia (http://www.ecc1.org), I can attest from personal experience that plastic bags stuck in the river's reeds make up a large portion of the river's pollution.

      I don't understand what the fuss is about the tax, honestly. People are free not to pay it! (Just bring your own bag.) I think this debate should be postponed for one (1) year. There should be a study of the river's pollution now, and another one in a year. If it's not working, repeal the tax. Simple as that.

    17. Stephen Holcomb Vick says:

      Our mega giant superstore, Meijer,Inc. once paid the consumer, 5 cents for every paper bag we brought back into the store to rebag our groceries with. In Michigan, a pack of Basic cigarettes cost $5.75 a pack. I quit smoking when they were $2.50 a pack. Michigan has a 10 cent refund on all pop cans and bottles. I quit buying things in returnable bottles many years ago.

    18. Jeff Benson, Washing says:

      " * People are shopping in Virginia and Maryland for their groceries instead of DC and are being inconvenienced."

      For the most part, no, they aren't. People are carrying cloth, reuseable bags, or are paying the tax. Unless you're living right on the border with VA or MD, it's far more expensive to travel out of DC to purchase groceries — ESPECIALLY since Virginia charges sales tax on grocery purchases, while DC does not.

      For people who ARE traveling to Virginia to buy their groceries: I guess they're okay with some taxes, but not others … ?

    19. Kikkie says:

      I'm with CCC on this one. If it doesn't seem to make a difference after a year, then debate.

      I've lived in DC for only a year, and I've seen the transitional behavior from using bags to bringing one's own. It can be as simple as a backpack.

      It's good to keep tabs on taxation (I read somewhere that they were thinking about upping it to a quarter) and where this tax money is going, but this, for now, doesn't seem to be the end of the world.

    20. David says:

      I wonder if the author of this article would consider writing an update. He may want to include the fact that plastic bag use has decreased in Washington, DC by fifty to sixty percent. I would also be interested to seen an analysis of the impact that this tax has had on retail. Have people actually started to do their grocery shopping in Maryland and Virginia?

      It always amazes me that people who claim to be for free markets are such passionate supporters of subsidies. Then again, it is very difficult to make a man understand something when his salary depends on him not understanding.

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