Municipal taxes and fees #1

From the DC Department of Environment website. DDOE press release: District’s 5-Cent Bag Fee Takes Effect January 1.

On January 1st. a shopping bag tax of 5 cents/bag went into effect in DC. Being a person big on efficiency, I have no problem with this assessment, even though sometimes I forget to bring bags with me, and of course, since so many purchases are spur of the moment, if you don't make a habit of carrying bags, you can be out 5 cents... even if I don't think necessarily that the stated purpose of the fee--to provide money to clean up the Anacostia River--has much to do with bags as plenty of discarded bags end up all over the city, and plenty of trash that isn't bags ends up in the Anacostia River.

But like with the idea of the gasoline excise tax, in how so many people believe that gasoline excise taxes cover the cost of building and maintaining the road network, while the reality is that at best 50% of the cost of roads are paid by taxes and fees (tolls, registration fees), some people believe that this unholy fee of 5 cents per bag makes it smarter to shop outside the city.

Today's Post has a letter to the editor ("All Opinions Are Local : Congrats! The bag tax has changed my behavior.") from one such deluded person, who writes:

My family and I will change our behavior by voting with our feet. We’ll go to Virginia to get our bags — and our groceries. I went tonight and was given 55 cents worth of grocery bags free of charge, and they even double-bagged my gallon of milk. I also paid $2.36 in sales tax revenue. I’m not sure that shifting sales tax revenue from the District to Virginia is what the law’s proponents had in mind, but that will be the effect in our household. Unfortunately, it will also affect D.C. businesses.

But the writer fails to take into account:

1. The opportunity cost in time to travel outside of the city to shop;
2. The variable (gasoline) and fixed (depreciation etc.) costs of using a vehicle to travel outside of the city to shop;
3. The fact that DC doesn't charge sales taxes on groceries, while Virginia charges 2.5% sales tax on groceries means that the reality is that Mr. Dierlam paid $1.81 in sales taxes to Virginia to "save" 55 cents.

Mr. Dierlam, by looking so narrowly at the bag issue, cost himself money "on principle."

I guess it's true when critics say that people too often aren't "rational actors" when it comes to economics.

For some time (I have a big efficiency kick) I have tried to bring a bag while shopping (a little tricky since a lot of my movement is done on bicycle), so while the bag tax is a bit of an imposition, it's nothing that will make me significantly change my behavior, other than to remember more often to bring a bag.