In part 1 and part 2 of this 3 part series I focused on the data of the number of bags taxed in Montgomery County and Washington DC to see if their bag taxes actually changes the behavior of shoppers by punishing shoppers with a tax for accepting bags from stores at checkout and get them into a habit bringing reusable bags to not pay a tax/fee (spoiler alert – it does not).
Many have noted to me that maybe this tax is all about the money generated for the local jurisdiction. Here is some data about the money generated for Washington DC and Montgomery County:
Washington DC: I noted these numbers in part 2…but worth mentioning again…here is a chart of revenue collected by Washington DC since the tax went into place:
Between FY2011 and FY2017 the revenue rose from $1,845,313.25 to $2,382,747.11…that is a more than a 29% increase in revenue. This has been a good source of revenue for DC.
Between 2013 to 2018 the bag tax rose from $3,021,083 to $3,207,490 annually (that is a 6% increase). To be fair, the amount of money reported collected has leveled off between 2015 – 2018…but we are not seeing revenue decreases based off of massive numbers of people changing their shopping behavior.
There is another side of this revenue discussion. The amount of money the stores in Montgomery County get to keep based on this tax. On May 3, 2011 Montgomery County passed legislation (Bill 8-11) that places a five-cent charge on each paper or plastic carryout bag provided by retail establishments in the County to customers at the point of sale, pickup or delivery. Retailers retain 1 cent of each 5 cents for the bags they sell a customer.
I looked at the largest contributor (Giant of Maryland, LLC) to see how much money they take in every year…here is a summary of the revenue Giant Foods has made on this tax:
- 2018: $140,379
- 2017: $135,582
- 2016: $138,052
- 2015: $133,413
- 2014: $132,671
- 2013: $126,884
So Giant Foods in Montgomery County has collected over $800,000 between 2013 and 2018. While I understand there is a cost to update the point of sales systems and a cost to track and pay this tax to the county…this looks like a good revenue generating fee for businesses (especially large businesses).
The DC bag tax is similar (Effective January 1, 2010, the Act requires all District businesses that sell food or alcohol to charge a $.05 fee for each paper or plastic disposable bag distributed with any purchase, with certain exemptions. Most businesses are required to remit $.04 of each $.05 fee to the Office of Tax and Revenue on their sales tax return. Businesses that offer a rebate to customers who bring their own bag are only required to remit $.03 of each $.05 fee. Remitted fees are deposited into the Fund.) meaning that there are businesses in DC bringing in money to their bottom line as well. I have not found documentation on DC businesses and how much money they are bringing in…so I do not have that data for you in this post.
If you ever wonder…after the implementation of this tax/fee on a jurisdiction…after seeing that the number of bags leaving stores and being taxed is higher than when the tax was initially implemented…why are elected officials not pushing for a ban on bags at checkout to really reduce the number of bags leaving stores? Look at the money the local governments and businesses are bringing in. Why would they ever want to give that up?
I do not believe those advocating for this tax here in Howard County are looking at this as a money generator for the government and businesses…but that this what it has proven to become in other nearby jurisdictions and why those jurisdictions will never give it up (in my opinion). The bill that passed for Howard County is only for plastic bags…but that will still be a revenue generating fee locally. We will have to wait and see what the County Council does if they bring this forward. Will they propose to reward stores with revenue as part of this tax on shoppers? That is how they will get business buy in on this tax so it would not surprise me to see that happen in Howard County.
If Governor Hogan signs HB 1166-2019 I expect the Howard County Council to begin having discussions locally about implementing this tax later this year or early next year. When/if they do…my hope is that they actually look at the DATA and not just listen to special interest groups that attend public forums. I also hope they do more outreach to the community on this issue than our delegation in Annapolis did…because most people I talked to about this did not know it was happening in Annapolis.
This remains on my radar…because I expect this to heat up locally in the future and will give me a lot to write about on the blog.