The big news in Washington today are the early returns for the new DC bag tax. As of January 1, DC shoppers have to pay a 5 cent tax for each disposable plastic or paper bag that they get at grocery, drug, convenience, and liquor stores.
The Washington Post reports that the DC government has released results for January, the program’s first month. It appears to have had a big effect on behavior:
In its first assessment of how the new law is working, the D.C. Office of Tax and Revenue estimated that food and grocery establishments gave out about 3 million bags in January. Before the bag tax took effect Jan. 1, the Office of the Chief Financial Officer had said that about 22.5 million bags were being issued each month in 2009.
In other words, 87% fewer disposable bags were handed out in January than the average month last year.
Of course, one implication of a big behavioral response is that the tax might collect less revenue than anticipated:
District officials had estimated that the tax would generate $10 million over the next four years for environmental initiatives [note: that’s $208,000 per month]. The money will go to the newly created Anacostia River Cleanup Fund, which will spend it on various projects. But in January, the tax generated only $149,432, suggesting that it might fall short of revenue projections.
One shouldn’t make too much of a single month of results–particularly when it’s the first month of the program.
But I suspect that Arthur Cecil Pigou (the father of environmental taxes) is smiling somewhere.