UK Plastic bag charge – a real environmental tax – a response to comments

Kieran O’Connor has written:

“I have always wondered about green taxes – and this is great example.

1. Let me ask – if the average person is at the checkout in Londis, (perhaps shopping on their way home from work) they don’t have a bag with them so will the 5p cost of a carrier bag persuade then to carry their frozen peas in their pocket instead of taking a bag? I think not.

2. Say they pay the 5p in the instance above – and it goes to the government. Where does it end up? In another ‘green initiative’? Well, maybe. Let’s be charitable and say it does – how does that 5p get spent? Perhaps as part of a grant to an ‘eco project’ – so really it goes towards salaries, advertising, conferences, leaflets, publicity – the list goes on.

Now, in the scenario outlined above – has the 5p made any contribution towards saving the planet? None whatever.

And this is my point – so called green taxes are just for perpetuating debate, lining pockets of those with a vested interest or maybe they just get lost in the swamp that is the government budget. All in all it’s just posturing.”

Thanks Kieran for these comments which I think illustrate a common view on environmental taxation. I think its worth going through the comments to respond. General taxation is raised to fund the public goods which governments provide (often in response to what the electorate demand). As such it doesn’t have as an objective changing behaviours, its purpose is  to raise money and perhaps to support other policies like redistribution of wealth from private to public goods. There isn’t any hypothecation of the funds raised generally so one doesn’t pay a tax to fund the army and taxes described as purposive often aren’t (car registration tax isn’t used just to provide roads much to the chagrin of motorists and motoring organisations).

Environmental taxes can be the same, just there to raise funds for government expenditure. Or if they are for an environmental purpose then their real object should be to change a behaviour by pricing an environmental externality or good, which the market doesn’t price, so that people think about its use. If environmental taxes are there to change behaviour, they can’t be relied upon to provide income to governments as when behaviour changes in response to the pricing signal, the revenue source will decline.

The plastic bag charge is an environmental tax as its intention is to change behaviour, in the example of the trip home with a visit to a supermarket, the purpose is to encourage people to carry a bag with them rather than use and discard a plastic bag – one may disagree with this but that is the behavioural change sought. The environmental intention is clear and a pricing signal is needed to change behaviour. An alternative would be to introduce legislation banning plastic bags which puts the cost of the behavioural change onto business and the consumer indirectly, not the consumer directly.

The government has decided that it will not include the revenue raised in general taxation as it should be uncertain in amount as people decide that they don’t want to buy plastic bags at 5p a shot. Hypothecation is always difficult as we can all disagree what the money is spent on but remediation of the effects of plastic bags doesn’t seem such a bad idea to me.

No comments yet.

Leave a Reply