A story posted on by Heather Cherone at DNAInfo Chicago highlights a point I’ve been making for some time. State and local governments chronically overestimate the taxes they’ll realize from increases:
CHICAGO — The good news is that Chicago’s effort to keep plastic and paper bags out of area landfills by imposing a 7 cents-per-bag tax is succeeding beyond officials’ wildest dreams.
The bad news is that the success of the fee in dissuading shoppers from taking single-use bags means the city’s coffers are taking a steep hit.
Chicago officials balanced the city’s 2017 spending plan based on an assumption that the city would earn $9.2 million this year from the tax.
But that assumption appears to have missed the mark by at least $1.5 million based on data complied by the city through June 18.
In debating the 7 cent per bag tax the stated reason was to reduce the number of plastic bags used by Chicagoans. In other words if it were completely effective the city would realize no revenues from the tax. That rationale didn’t stop the city from including the tax in its budget projections.
To some people $1.5 million doesn’t sound like a lot but it’s a 15% shortfall. That’s a substantial gap for a city whose tax base is declining and whose bonds are teetering on the edge of junk status. And it’s the same error the county and city made when they increased the sales tax and the same error the county is making in imposing a steep tax on sugar-sweetened soft drinks.
I have not bought a single plastic bag since the city imposed its tax. It was an avoidable expense so I avoided it. Other Chicagoans are clearly doing the same thing. The tax on bags is a regressive one so the likelihood is that it’s falling hardest on the poorest Chicagoans.
Contrary to the beliefs of state and local government officials incentives matter and taxes have consequences. Wages do not magically rise to match tax increases. An increase in taxes will either reduce consumption or savings.
7 cents is a lot!
We use our own cloth bags about 2/3 of the time – the rest of the time I get the plastic bags because we use them for trash and litter scoop bags. I guess if we lived in Chicago we’d need to compare the cost of just buying regular trash bags instead of reusing grocery bags.
They’d have done better to recycle the tax into free cloth bags.
Dave, you once mentioned that you used string bags. Do you still? Or do you use cloth?
Seems that string would be more sanitary.
I use both. I keep a stack of bags in my car—five or six of them. I have two string bags that I purchased decades ago in Germany and three cloth bags, two of which I was given by stores.
You’d go broke buying plastic bags here with our baggers. Two or three items in one, then on to another. You really can stack that box of crackers on top of the apples, son. It won’t hurt them.