New D.C. Bag Fee Is Probably Better Than Ours

By Steve Kupferman

Illustration by Kyra Kendall/Torontoist.

Technically, in 2002, Ireland did it before us―but, on this continent anyway, Toronto was the first to institute a fee on plastic shopping bags. Washington D.C. recently became the first U.S. jurisdiction to follow our example, when its bag fee legislation came into force last Friday, January 1. Though outwardly similar to Toronto’s, the D.C. version of the fee is ultimately more muscular.

D.C.’s fee is five cents per bag, so it has that much in common with Toronto’s. The differences between the two laws have to do with whose pockets all those nickels are being funnelled into. Toronto’s bag-fee proceeds are kept by retailers. If the city were to collect them, the fee could be considered a tax, which, because of the intricacies of provincial law, would be illegal. (Under the City of Toronto Act, the city can only levy new taxes on alcohol, tobacco, and admission to “places of amusement,” like movie theatres.)
Washington D.C. has no such restrictions to contend with. Here’s what they’re doing with their bag-fee nickels:

• Retail stores keep one cent of each bag-fee nickel for themselves.
• If a store decides to give customers a five-cent credit for every reusable bag they provide at checkout, it can keep two cents of every nickel, instead of the standard one cent. All money taken in by stores under the bag-fee law is considered tax-exempt. (Toronto’s bylaw is mute on tax implications of the bag fee for retailers, if any exist.)
• Whatever is left of the bag-fee money after retail stores have taken their cut goes to the Washington D.C. city government as tax, and it is put in a special fund earmarked specifically for cleaning up the city’s waterways, particularly the Anacostia River, which flows through the city centre.

Toronto retailers have been encouraged, by the city, to donate the proceeds from the bag fee to environmental causes, but setting up a city-run fund to collect that money is a legal impossibility. Toronto’s bag fee, is, by all indications, reducing plastic bag use, as it was intended to do, but there’s no way for it to double as a steady revenue stream for green initiatives, as the D.C. bag fee hopefully will.

Image from a window poster designed by the city for D.C. retailers, courtesy of Green D.C.

Naturally, D.C.’s bag-fee fund will only be as good as the politicians in charge of it. “It’s also important to keep in mind that the bureaucrats who are going to siphon ever more money out of the D.C. economy aren’t exactly stewards of fiscal responsibility,” writes an op-ed contributor in the conservative Washington Examiner. “The new tax gives them a new slush fund.” Opinions might differ on the question of whether or not Toronto’s politicians could be trusted with such a windfall. Supposing they could, it would definitely be preferable to the current setup.
Aside from Washington D.C., other U.S. municipal and state governments have drafted (but not adopted) bag-fee legislation. Almost all of these laws are written to earmark the proceeds from the proposed fee for use in the service of some kind of environmental cause.
The State of Connecticut’s bag-fee act—which died in committee during their last legislative session amid intense lobbying from members of the plastics industry but might be back up for debate sometime this year—would have kept all the proceeds from the proposed fee in a “recycling initiative account” to be managed by the state’s Department of Environmental Protection.
Seattle’s proposed bag fee ordinance, which was killed in a public referendum last year, would have charged shoppers twenty cents per bag. Stores with annual sales of less than a million dollars would have kept the entirety of the fee, while stores with more than a million dollars in sales would have paid fifteen cents per bag to the city, as a “green fee,” while keeping the remaining five cents. The city’s cut of the fee would have funded waste prevention and recycling programs.
Philadelphia rejected a twenty-five cent bag fee last May, the proceeds from which would have been shared between retail stores and the city. New York City backed away from tentative plans to enact a five-cent fee last June.
Several U.S. states, including Maryland, Texas, Massachusetts, and Connecticut, have proposed―but not, so far, instituted―bag fees. In each case, the law that would authorize the fee requires at least some of the proceeds to be paid to the appropriate government body as tax.
The bag-fee concept is clearly becoming popular, and it’s a point of pride for Toronto to have been on the leading edge. This is an exceptional city, but it would be nice if our bag-fee legislation could be just a little less exceptional in the way it handles its spoils―without breaking the law.