Tax Freedom Day Post--Green Building Vice Tax

Most people are thinking about taxes this week.  Today is tax freedom day, the day on which most Americans have earned enough money to pay their taxes for the year, and Wednesday is tax day. In the spirit of this week, a post about taxation. 

How do you influence people to use reusable grocery bags instead of plastic ones? 

There are a few options:

1) Ban customers from using plastic bags

2) Ban stores from providing plastic bags

3) Give away or subsidize reusable bags to customers

4) Give away or subsidize reusable bags to stores

5) Educate stores and/or customers on the benefits of reusable bags

6) Charge customers a tax for the privilege of using plastic bags

7) Charge stores a tax for the privilege of using distributing plastic bages

The first two are traditional, command-and-control regulations.  "Thou shalt not....".  Historically, this had been the model of environmental regulation.  3 and 4 are incentives.  During the Bush Administration, market based incentives and voluntary programs were very much in vogue for environmental protection. 

I believe that all four have their place.  For big, intractable problems with clear environmental consequences, command-and-control is the only way to go.  Incentives are best utilized to correct for market failures, like making solar or wind power more affordable because carbon is not priced in the cost of petroleum.

But I think five through seven--education and taxation are underutilized tools of environmental policymaking.  Miley Cyrus sporting a reusable shopping bag in the new blockbuster film is a way of educating and influencing public action.  Make the reusable tote the new "it" bag.  The green building equivalent is providing education on green building practices, and for government agencies to build green and widely promote their efforts.

Taxation is another great way to influence public choices. By taxing a plastic bag, even a small amount, people are penalized for their anti-social behavior.  We do it with cigarettes, why not plastic bags? Or stick construction? By making alternatives available at the same price as the tax--a 50 cent tax for each plastic bag, and a reusable tote at the same price, people will be more likely to choose the reusable bag. Combined with education on better choices, a penal tax is a very strong policy lever. Portland has sort of done this with the feebate structure, charging builders who want to build traditionally, and remitting that fee for green construction.  But I have yet to see a green building program which taxes builders for traditional construction.  The tax could be tied to the increased public resources needed to service traditional buildings--stormwater management, electricity, etc.


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Christopher G. Hill - April 14, 2009 10:25 AM

personally, I am all for the carrot approach. Incentivize good behaviour. Most of the time, any club will cause avoidance with the accompanying lack of internalization. Though the "vice tax" seems to be a better idea than a flat ban.

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