Bag surcharge a detriment to D.C., study says

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A new study on the District’s bag tax may give city residents a few more reasons to be angry beyond the 5-cents-per-bag surcharge they face on every trip to the local grocery store.

The study, conducted by the Beacon Hill Institute at Boston-based Suffolk University, projects that the bag fee will hurt the economy and cost the area more than 100 jobs this year alone. In addition, “the tax will only generate $2.17 million in revenue this year” — well below the projected take of $3.1 million, according to the BHI survey.

BHI analysts said the lagging revenue reflects the fact that city residents are shunning eco-friendly reusable shopping bags and instead either buying fewer items or simply avoiding the bag tax altogether by purchasing products outside of the city.

As a result, BHI estimates a drop in sales and profits in retail supply businesses as well as employment, accounting for the 100-plus jobs that would be lost. At this rate, BHI estimated that D.C. would “forgo an additional $108,340 in sales tax revenue due to the bag tax” in 2011.

The study, issued late last month, was commissioned by Washington-based Americans for Tax Reform, a nonprofit activist group whose members have opposed the bag charge. The group on its website says it “opposes all tax increases as a matter of principle.”

Supporters of the surcharge, passed unanimously by the D.C. Council in June 2009, dispute the findings.

Ward 6 council member Tommy Wells, a co-sponsor of the measure, said in a phone interview Tuesday with The Washington Times that the report is “not really credible.”

Mr. Wells, a Democrat, said that, contrary to the report, the primary purpose of the bag tax was not to bring in revenue but to aid the environment by reducing the amount of plastic and paper bags used. By that standard, he argued, the tax has been extremely successful.

BHI’s researchers “apparently do not understand the bill very well,” Mr. Wells said. “The agreement is that, if [the tax] does raise money, the money goes to cleaning up the river. It has done that. We have opened a record number of grocery stores after the tax was passed.”

Mr. Wells‘ chief of staff, Charles Allen, was even more emphatic, saying the study had “no merit at all.”

“They clearly didn’t bother to do any of their homework,” Mr. Allen said. “They neglected to mention the fact that plastic bags make up 47 percent of the trash in the river. The bigger grocers have said they have seen at least a 60 percent reduction in the bags used.”

This reduction, Mr. Allen said, is good for business because both large and small grocery stores are spending less money on plastic bags.

People do not think about how much money stores spend every year for stocking plastic bags, he said.

Under the statute, 4 cents of the 5-cent bag tax will go into a fund dedicated to cleaning up the Anacostia River. The other penny will be kept by the retailer. Stores that provide incentives to bring reusable bags will retain 2 cents.

“It is not fact in terms of trying to say it is killing jobs,” Mr. Allen said. “Not a single business has come forward and said, ‘I have to lay off an employee because of this.’ None of them are telling us that sales are going down.

“They talk about disposable income, saying people in D.C. will go shop elsewhere for food,” Mr. Allen said. “D.C. doesn’t have a sales tax on fresh food. They don’t account for that.”

Mr. Allen argued that the money on transportation to shop outside the city would more than offset the bag tax.

Mr. Allen said the city measure wasn’t so much a tax as a fee — one that can be avoided if customers remember to bring reusable bags on shopping trips.

“When you are paying taxes, that is something that you do not get to avoid,” Mr. Allen said. “You as a consumer do choose here. If you don’t want to pay 5 cents, you never have to.”

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