Bag tax missing revenue goal but city touts drop in use of disposables

on Jul4

4 July 2017 | 11:14 pm

Cook County’s soda tax may have been stalled by a court order, but Chicago’s tax on disposable bags is celebrating its sixth month anniversary — and not bringing in as much cash as the city had hoped.

Chicago aimed to raise $9.2 million from the 7-cents-a-bag fee in its first year. As of collection on June 18, the tax has raised nearly $2.4 million in the nearly five months since it took effect; that leaves it well off the mark, said Molly Poppe, a spokesperson for the city’s Department of Finance.

That aside, the tax has had a significant environmental impact thus far, reducing disposable bag use per shopping trip by 42 percent in its first month, according to a preliminary April study.

Poppe said though the revenue collection is “below what we expected,” the city hoped to discourage bag use with the tax, and “it’s a benefit that residents are responding.”

The Sun-Times found the bag tax brought in an average of $118,503.50 weekly during the 20-week period since it took effect Feb. 1. This includes revenue from a Floor Tax, which businesses paid on inventories of checkout bags they had on hand by the close of business on Jan. 31, in February and March.

The city collects a nickel of the bag tax. Retailers take the remaining 2 cents-a-bag — but only if they give out or sell the bags at checkout and state the tax on the receipt.

Revenue from the tax goes to Chicago’s corporate fund, said Poppe, supporting operations and services such as public safety, public health and tree trimming.

The preliminary study analyzed data from 14,168 consumers and was conducted by ideas42, a behavioral design lab, and researchers from New York University and the University of Chicago Energy & Environment Lab. Prior to the tax, 82 percent of consumers used at least one disposable bag. This number dropped to 49 percent after the tax went into effect.

The study will continue until the summer of 2018, said Doug Palmer, a senior associate at ideas42. Although the group has recently collected a new batch of data, Palmer said it has not analyzed it yet.

It will conduct more research in the summer and fall, and wants to see final results before it makes conclusions.

Palmer said he did not know enough about Cook County’s soda tax to comment on how it might affect consumer behavior.

The 1-cent-per-ounce tax on sweet beverages was slated to go into effect July 1. The Sun-Times was first to report that Cook County was considering the tax; it intends to use the revenue to help close a $174.3 million budget shortfall for next year.

On Friday, a Cook County judge put a temporary halt on the tax; the next court hearing on the matter is July 12.

Generally, researchers have found that putting a tax on a plastic bag impacts consumer behavior, Palmer said, by making them stop and think.

They recognize “that this bag is something that was free, and now it’s not,” Palmer said. “Every time customers go to a grocery store, they see that 7-cents-a-bag tax on their receipt.”

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