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Financing anything through strictly “green” taxes is never a sustainable option.

Fighting Plastic Windmills: Why Green Taxes Can Backfire

By Joakim Book @JoakimBook

Plastic Bags

For such a small item, plastic bags receive a surprising amount of public attention. In recent years, many countries have introduced penalty taxes on plastic bags’ use and a fair number of nations have banned plastic bags altogether. In America, eight states and several cities have already banned single-use plastic bags.

It’s not only rich countries doing the banning. In 2002, Bangladesh became the first developing country to ban thin plastic bags, and China has rolled out plans to ban non-biodegradable bags in major cities by the end of 2020. Last year, several Indian states banned plastic bags – ahead of the national plan to eliminate single-use plastics by 2022.

To some extent, the COVID-19 pandemic put this global trend on hold, as single-use plastics were back in vogue, and reusable tote bags were barred from grocery stores. The coffee chain Starbucks even banned reusable mugs to limit the spread of the disease. It would seem that the pious campaign against single-use plastics had come to an abrupt stop.

Not so. In July, Germany opted for a ban on certain single-use plastics. After having “persuaded” supermarkets to phase out the use of plastic bags beginning in 2015, the current German environmental minister Svenja Schulze went even further, introducing a complete ban on single-use plastic cutlery, straws and food containers. Commenting on the announcement, Schulze stated her opinion of plastic in no uncertain terms, “Many single-use plastic products are superfluous and non-sustainable use of resources.”

Two months before that, the beacon of environmentalism that is Sweden began a thoroughly confused experiment with taxing plastic bags. By adding a punitive 3 krona ($0.35) tax on single-use plastic bags, the Nordic country kept the fight against plastic going in the midst of the pandemic. At the time that everyone stocked hand sanitizers and avoided touching rails and doorknobs in fear of the coronavirus, the retail price of plastic bags tripled, causing many people to wonder what the politicians were really up to. Why ban single-use plastics at a time of their greatest usefulness?

Spending political and economic resources to tax (or ban) plastic bags was always an odd gambit. There are at least three reasons why taxing plastic bags in the name of the environment makes little sense.

First, plastic found in oceans, that iconic example of plastic waste – which itself might be a much smaller problem than we thought – only accounts for 0.1% of world annual plastic production. The vast majority of the plastic we use and consume don’t end up in nature. Most degradation of rivers and oceans by plastic is done by a handful of developing countries with subpar waste collection and processing systems. In that light, rich countries putting punitive taxes on plastic bags or banning them altogether looks like misdirected penance: plastic bags at grocery stores are emphatically not the problem.

Second, it’s counterproductive. The war on plastic has lead to people replacing durable plastic products with fragile paper bags, with metal straws, reusable cloth or wool bags, or even bamboo toothbrushes. The problem is that these replacement items are usually worse for the planet. An environmentally-conscious consumer who replaces her plastic straws with a metal one needs to use it something like 150 times before its environmental impact equals the single-use plastics. Paper bags, the closest substitute to their “abhorrent” plastic cousins, take up much larger space in landfills and need to be reused at least four times before their environmental impact is on par with single-use plastic bags. Nobody does that. I’m all in favor of tote bags, but I doubt that I have used mine the 172 times it needs to break even environmentally – and I have five bags in total.

Ironically, it was precisely to reduce waste that Americans switched from paper to plastic in the first place. Journalist and author John Tierney, who has written much on the foolishness that is the panic over plastic, traces the history of the “throwaway society“ in a recent article for the City Journal:

“American merchants and shoppers switched from paper to plastic packaging because it reduced waste. Plastic was cheaper because it required fewer resources to manufacture. It required less energy to transport because it was lighter. Plastic took up less space in landfills than paper, and it further reduced the volume of household trash because it preserved food longer.”

Third, the green tax arguments usually quoted – that the revenue raised from taxing environmentally damaging products can help pay for needed environmental efforts – has run into the same problem that all green taxes do. They incentivize people to substitute away from the good in question, which reduces the tax base, and consequently the total sum raised. Four months into the Swedish experiment, which the government thought would contribute 2 billion krona in revenue ($225 million) this year, only about 2 percent of that amount has been raised. Many experts, academics, and those in the retail sector complain about the failure of the policy: it causes unnecessary problems for groceries and customers, to very little gain for the environment, if any.

More devastatingly, the kinds of countries whose environmental consciousness most implore them to tax plastic are also the ones whose plastic footprint tends to be the smallest. Partly because of that consciousness (and the affluence to afford it), they have already optimized their waste processing plants and replaced many single-use bags with biodegradable substitutes. The further gain from stamping out plastic bags, through taxes or outright bans in Sweden or Germany, makes little environmental sense.

Financing anything through strictly “green” taxes is never a sustainable option. After all, the aim of those policies is to reduce and remove the tax base in the first place. Instead, taxing plastic bags is environmentalism at its worst (perhaps second-worst, as destabilizing the electrical grid and making the electricity mix more CO2-intensive is much more damaging). The political fight over plastic is symbolic – it nudges human behavior in a direction that feels good rather than really improving things that we say we care about.

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