Putting Tax Policy to Work

Interesting story mentioned here in the Financial Post about Toronto’s new bylaw that businesses must start charging $.05 for single-use plastic bags.  Will it make a difference?  Looks like it already has.  Metro (grocery company) has announced that distribution of plastic bags in their stores in Ontario and Quebec dropped by 70% within four weeks of starting to charge for them.  Amazing that such a small financial incentive can have such an impact on our behaviour.

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10 comments on “Putting Tax Policy to Work
  1. dhaveloose says:

    Most European countries have yet forced grocery companies to charge their costumers on the use of single-use plastic bags. These government incentives are very good but does the economy really need to wait until the government forces them to be environmental consciousness.

    In Belgium there are 4 main grocery companies. One of them, Colruyt, never had any plastic bags present in their stores. They just provide their costumers the cardboard boxes, in which they get the products delivered from their suppliers.
    Before the government forced grocery stores to charge costumers on plastic bags, this company not only profited by not giving bags, it also didn’t need to deal with packaging waste (as they gave it away to the costumer).
    This is one of the many action the company has taken to keep it’s cost down and last but not least; it is the most profitable grocery store in Belgium.

  2. colinhickey says:

    Is the government really “forcing” the public to become environmentally friendly by charging the public for the use of plastic bags. Personnally I don’t think it’s the charge per se, it is the awarness that is created through the introduction of this new charge. For what is 15cents to even the most poor in society. This awareness and the consequent social stigma around walking the streets holding plastic bags is what forces people to become environmentally conscious.

    However, with regards to Belguim, it must be recognised that for certain behavours in society such as receiving a free shopping bag need to be incentivised as socierty will not learn otherwise as it will go on to think that it is okay to use these plastic bags. Especially for those companies that hold a diffrenciated strategy, unlike the low cost Belguim store indicated above.

  3. jacksonhamilton says:

    While I do agree that to get total buy in you have to affect the social psyche, I do believe that minimal user fees have an major impact at changing behaviour. At even 0.05 a bag, it causes people to think about the purchase and not take it for granted. You would be surprised at how ardent people become at not having to pay $0.10.

  4. cobus204 says:

    In South Africa minimal user fees will not go down well as many people are trying just survive. It may also create negative sentiment for sustainability initiatives. Developing countries may have to look at more incentive based strategies.

  5. colinhickey says:

    With regards to Africa, a total government ban on plastic bag use may be the best option. These plastic bags are imported to Africa. If the government insisted on using only ‘re-usable’ African made bags it would both stop the pollution and increase employment in Africa. However such a solution may cause free-trade issues (I’m not familiar with African free-trade policy)

  6. jianzhou says:

    As Jeremy mentioned in the class, when the “market maturity is weak, more government interntion is needed to boos the delivery of ecological economical efficiency. In south Aferica, The abillity to deliver any product with ecological economical efficiency is weak, thus government intervention is more than necessary.

  7. manitobadan says:

    I think the point about creating negative sentiment is valid, and ideas that work in some areas cannot just be copied over everywhere, but in my opinion there are ways around this. Programs where reusable bags are given out free to initiate the program are just an example.

    I also found it interesting that while this is called a “tax” in the article, the government collects nothing from it. At $.05 per bag, it would actually be profitable for the stores to sell more plastic bags, so it does not impose a burden on business. I think by implementing something like this as a standard practice, it eliminates some it being used as a competitive advantage, and puts business on the same level..they will not lose business, as people will continue to shop.

    I don’t think there would be free trade implications, unless countries banned the imports only from specific countries, or if imports were banned and African countries took over production internally. Even if it could be challenged, I think the public relations implications would cause hesitations.

  8. egitman says:

    Back to Jackson’s note I’d like to share one of my earlier experiences back from Turkey at my first job.

    There we were importing and marketing several different foundry products within the country. One of our suppliers came to us and offered a well designed software (year was 1989) to be used in multiple applications for free to those customers using their products.
    The idea was simple and the product was great and the deal was amazing, i.e. free…. Well, for about 15 customers we’ve initially distributed the software we realized in about 6 months that no one was really using it. There was something going wrong but what ?
    We then changed our approach and started selling it at $100 a piece with a well rounded introduction to the market. Guess what ? Every single customer purchasing it (about 8 or 9 customers) kept using it year over year and all reported gained efficiencies in their product lines.

    The moral of the story ? The value of the product must be recognized, i.e. anything given for free does not necessarily help people understand the actual added value on the product.

    In other words charging 5 cents a piece for plastic bags does make so much more sense in customers minds than anything else. In the case of S.Africa I’d say make the price 0.5 cents but still put a value on it to help people understand what they consume is brought up with the use of some resources.

  9. jeremy says:

    Interesting debate!

    I am an active campaigner in Singapore on this issue: http://jeremybwilliams.wordpress.com/2006/04/22/kudos-to-cold-storage/ and I am pleased to share with you that India (or Delhi, at least) is now stepping up to the plate. Note well, that command-and-control is the operative word here! http://jeremybwilliams.wordpress.com/2009/02/02/delhi-to-outlaw-plastic-bags/

  10. egitman says:

    Seriously, a jail sentence of up to five years is a bit overkill. I’m not sure how enforceable such an initiative can be ? Do they have enough space in jails ? How about the time for trial and all other additional labor to uphold this legislation.It sounds like an overkill.

    I’d think eliminating plastic bags from circulation would have been so much more effective…

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