DC lawmakers tried to sugarcoat the five cent per bag tax on store bought items, calling it a fee rather than a tax. The tax has been in effect in the District of Columbia since New Year’s Day. Stories in the Washington Post, the Wall Street Journal, and other media have reported of widespread disaffection with the tax among people in DC. The lawmakers behind the tax surely do not understand economics. Furthermore, the legalese used to draft the law would provoke laughter if it was not so deserving of condemnation.
Consumers must pay five cents per bag on any item bought in a store that sells food. The founders of this great country would question the logic to the law because it makes no sense. For the infraction of stepping foot in our Nation’s Capitol, and having the gall to buy something, you must pay to clean up the Anacostia River. Furthermore business owners are prohibited by law from paying the tax for you. It would only make sense to a person who sees all economic activity as an opportunity to siphon off money for the nanny state.
The problems with the tax are many.
- People are shopping in Virginia and Maryland for their groceries instead of DC and are being inconvenienced.
- Small, irrational taxes such as this one often start off small, but grow larger and are never retired. If the Anacostia River was to become a pristine nature preserve, this tax would not disappear if history is any indication.
- Many stores sell a small amount of food but mostly non-food items. They are being encouraged to end the food side of their enterprise, or hurt their business. This is an affront to their freedom to transact as they choose.
- The DC Council member, Tommy Wells, who sponsored the bill apparently doesn’t understand that he is injecting himself in between every private-market food sales transaction in the city. The business owners have every right to have a bone to pick with him as he is alienating their customers. Wells though said, “I have not heard it being a hardship on retail establishments. There has been some customer concerns, but it seems since the fee is charged to the customer and not the business, that really doesn’t make any sense.”
- Then, there are the true victims of the tax, the Washington DC local grocery store, and restaurant owners, and the poorer residents of DC who can travel less easily to nearby states to shop. The grocery store owners and fast food franchisees in DC are entrepreneurs who run their own businesses in a country where they are free to do so. Now the DC government is piling on one more regulation in an already tangled pile of regulations onto the backs of the DC entrepreneurs. It’s too much.
The biggest losers as a result of the tax, if not the business owners who may have to close up shop, are the poorer residents of DC. To them the dollars they spend on grocery bags that used to be free really add up. And what are they getting in return for it? Only the promise to clean a river that they did not ask to clean. It is not them, after all, who polluted the river. If people want to clean the river, let them start their own non-profit organization and get those who believe in the cause to go at it or try to find the real polluters of the stream who are not local grocers or people without automobiles.
Here is the onerous wording of the tax itself:
Sec. 4. Establishment of fee.
(a)(1) A consumer making a purchase from a retail establishment shall pay at the time of purchase a fee of $.05 for each disposable carryout bag.
(2) A retail establishment shall not advertise or hold out or state to the public or to a customer directly or indirectly that the reimbursement of the fee or any part thereof to be collected by the retail establishment will be assumed or absorbed by the retail establishment or otherwise refunded to the customer.
(3) All retail establishments shall indicate on the consumer transaction receipt the number of disposable carryout bags provided and the total amount of fee charged.
(b)(1) (A) Each retail establishment shall retain $.01 of each $.05 fee collected; provided, that an establishment that chooses to offer a carryout bag credit program to its customers, as set forth in subparagraph (B) of this paragraph, shall retain an additional $.01 from each fee collected, for a total of $.02 for each $.05 fee collected.
(B) A retail establishment shall retain an additional $.01 of each $.05 fee for a carryout program which:
(i) Credits the consumer no less than $.05 for each carryout bag provided by the consumer for packaging their purchases, regardless of whether that bag is paper, plastic, or reusable;
(ii) Is prominently advertised at each checkout register; and
(iii) Reflects the total credit amount on the consumer transaction receipt.
(C) The fees retained by the retail establishment under this paragraph shall not be classified as revenue and shall be tax-exempt for the purposes of Chapters 18, 20, and 27B of Title 47 of the District of Columbia Official Code.
(D) The fees retained by the retail establishment shall be excluded from the definition of retail sale under D.C. Official Code § 47-2001(n)(2) and from the definition of gross receipts under D.C. Official Code § 47-2761(5).
(E) The fees to be remitted to the District under subsection (b)(2) of this section shall be added to other tax payments in determining whether the electronic payment requirement under D.C. Official Code § 47-4402(c) applies.
(2) The remaining amount of each fee collected shall be paid to the Office of Tax and Revenue and shall be deposited in the Anacostia River Cleanup and Protection Fund established by section 6(a).
(c) The Office of Tax and Revenue shall develop rules for frequency and method for reporting and transmitting the fees, as set forth in subsection (a) of this section, to the District.
(d) Except to the extent of any inconsistency with this act, the same provisions to Title 47 of the District of Columbia Official Code that are applicable to the gross sales tax shall govern the administration, collection, and enforcement of the fee set forth in subsection (a) of this section.
