The House Committee on Ways and Means has approved the proposed “Single-Use Plastic Bag Tax Act,” which will impose a P20 per kilogram tax on single-use plastic shopping bags. The bill is estimated to raise about P4.8 billion annually for the government — money that will finance activities under the Solid Waste Management Act of 2000.
The issue, particularly for Environment officials, is that while they support the proposed tax, they have misgivings about imposing the levy by weight, instead of by piece. Mind you, one kilogram of plastic bags is a lot of bags, and the tax on that is only P20. Environment Undersecretary Benny Antiporda was quoted in a news report as saying that taxing by weight could even worsen rather than reduce plastic pollution.
Plastics manufacturers, to save on tax, might produce thinner bags that are of lower quality, he said. More bags to the weight can help save on tax. But thinner and lighter bags cannot be reused as often, and would be discarded faster than thicker bags. These lighter bags will just end up in landfills, unless segregated and disposed properly. Worst case, they will end up in waterways, he added.
There are at least two concerns with this proposed tax: will it significantly reduce the consumption of single-use plastic bags; and, should the tax be imposed by weight or by piece? Incidentally, the excise taxes on liquids (fuel, beer, liquor, etc.) are specific and imposed by volume (in terms of liters, etc.), while the excise taxes on cigarettes are charged per pack. The excise taxes on vehicles and jewelry are imposed per piece or unit, but based on the value of the item. How then should we do this with single-use plastic bags?
There is no doubt, as with the experience in other countries, a tax on single-use plastic bags can reduce consumption. In Portugal, for example, a plastic bag tax was imposed in 2015. A 2017 article in the journal Waste Management quoted a study by researchers at the Universidade Nova de Lisboa which showed that the tax “reduced the consumption of plastic bags at short and medium term,” and that reusable bags given by stores and supermarkets were “critical to reduce consumption.”
That study, the article noted, showed that the tax resulted in a “74% reduction [in] plastic bag consumption with a simultaneously 61% increase [in] reusable plastic bags.” However, the study also noted that since plastic bags were then reused for shopping instead of being used as garbage bags, “the consumption of garbage bags increased by 12%.”
Similar success was experienced in Ireland, where a plastic bag levy was imposed as early as 2002. In a 2007 article in the journal Environmental and Resource Economics, authors Frank Convery, Simon McDonnell, and Susana Ferreira were quoted as noting that the plastic levy reduced plastic bag use by consumers by 90%, with a corresponding reduction in littering as well.
The pending question, to my mind, is whether the plastic bag tax should be charged by weight or by piece? And on this, I support Undersecretary Antiporda’s call for a tax per piece. For the simple reason that the tax should be high enough, and somewhat more direct, to create an impact particularly on consumers.
Take the case of grocery shoppers. Assuming a P20 tax is charged per kilogram of plastic bags. One kilogram will probably account for about 100 bags, for a measly 20-centavo tax per bag. A pass-on tax of 20 centavos per bag is practically negligible to a shopper with thousands worth of groceries. But, assuming, for the sake of argument, a tax of P10 per bag, then the consumer will probably think twice about asking for a bag, right? Incidentally, in Denmark, where a plastic bag tax was first imposed way back in the 1990s, I believe a plastic grocery bag cost roughly about P25, including taxes.
But, it is also worthwhile to look into the experience of other countries that taxed plastic bags specifically based on weight. We need to make public studies and research papers and technical assessments that can help boost the argument in favor of either taxing by weight, or taxing per piece. We need legitimate scientific research and data to help craft this tax legislation.
In the case of Denmark, a tax on plastic bags beginning 1994 was imposed at the importation or manufacturing level, based on weight. Retailers pay the tax when they buy the bags, and they in turn can pass on the tax to consumers by charging them for the bags. Plastic bag use went down 66% in the first year.
Ireland, in 2002, decided on a direct tax to consumers, charging them the tax per piece at point of sale. Plastic bag use went down 90% in the first year of the tax. The tax was raised to 22 euro cents in 2007, from 15 euro cents previously, as plastic bag use went up again. But, comparing the two countries, per-piece tax seems to work better in terms of reducing use.
In England, users were required by law to pay a five-pence fee per bag, which reportedly resulted in an 85% reduction in use within six months of legislating the fee. Again, the charge was per piece, and not by weight. Using a similar fee, Wales reportedly saw a 96% reduction in use within a year. These experiences by other territories should be taken into consideration by our legislators.
Ultimately, I prefer a more integrated approach to dealing with plastic bags, which involves manufacturing itself, then to distribution, and tax on sale, plus segregation and recycling. In particular, I point to also encouraging the use of waste for energy production, or as construction and building materials, or their reuse or repurposing for new productive uses. However, in the immediate, I also think that a tax per piece will have its advantages.
However, the plastic bag tax should be seen for what it really is, a tax. It is, mainly, another source of revenue for the government, just like taxes on cigarettes, vaping, beer, liquor, fuel, jewelry, and motor vehicles, among others. They are meant primarily to raise money for the government. The taxes’ impact on consumption, and on related negative externalities, are secondary. We need more creative and ingenious ways to deal with plastic pollution.
Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.