A Critical Evaluation of The Carrier Bag Levy Introduced in Northern Ireland - Essay Example

A Critical Evaluation of The Carrier Bag Levy Introduced in Northern Ireland Table of Contents A Critical Evaluation of the Carrier Bag Levy Introduced in Northern Ireland 3 References 8 A Critical Evaluation of the Carrier Bag Levy Introduced in Northern Ireland The Carrier Bag Levy was introduced into Northern Ireland on April of 2013, imposing 5p or more in additional charges on customers, to be collected by retailers and remitted to the governments Department of he Environment. Single carrier bags extend not only to plastic bags, but also paper and other bags made from plant-based materials, including starch, with the rationale being that carrier bags in general, regardless of material, present environmental harm. This constitutes a kind of environmental tax for the use of such bags, which apply for purchases of consumables made either at brick and mortar shops or online, the latter when the goods need to be delivered. On the other hand, exceptions to the levy include for the purposes of containing food for takeout, non-packaged foodstsuffs, some medicines, goods that have been contaminated by soil, and sharp implements such as knives and razor blades, among others. The proceeds are intended to be funneled into environmental and public good uses. Plans include increasing the levy to as much as 10p per bag, owing to the success of the levy in drastically reducing the use of plastic bags on the retailer level, with estimates of up to 80 percent in bag use reduction (Invest Northern Ireland 2014; BBC 2013; BBC 2013b; BBC 2013c; Department of the Environment Northern Ireland 2014; Clark 2014; NIDirect Government Services 2013). Washington State in the United States is noteworthy for having imposed a plastic bag tax four years prior, to the tune of 5 US cents per plastic bag, and while government claims a 60 percent reduction in plastic bags used, contrary figures indicate that plastic bag use has swelled, as evidenced by sustained increases in tax collections from plastic bag use (Williams 2014; Wilson 2013). Meanwhile, in countries like Rwanda, a total ban on plastic bags as opposed to a tax has led to the successful elimination of plastic bags in the country (Clavel 2014). Critiquing the carrier bag levy in the context of Adam Smiths taxation canons, one can see for instance that there is some debate with regard to whether it passes the muster on the canon on collection economy. As Smith expounded, this canon says that the tax should not be a discouragement to business and should be inexpensive to collect. From the point of view of the businesses, the carrier bag levy is not a discouragement to the conduct of business, because the retailers merely act as collection agents of the tax by the government. The retailers being the collection agents and the remitting agents to the government means that government spends as little as possible in terms of logistics and manpower to collect the taxes, and therefore rids itself of collection costs. This also means that it is able to retain most of the tax earnings from this tax revenue source. The retailer likewise does not spend anything other than its current overheads for collecting the levy, because the payments are done at the point of purchase at the cashier aisles, together with the goods purchases. The costs being minimal and being something that does no discourage the retailers from continuing to conduct business, one can say that this tax canon of Adam Smith is satisfied (BBC 2013; BBC 2013b; Ikeda 2012; Smith n.d.; Department of the Environment Northern Ireland 2014; Clark 2014; NIDirect Government Services 2013). While individual carrier bag levies are in the order of 5p to 10p, small on a per bag level, repeating the purchase of those bags over time adds up, and can be a considerable amount relative to the prices of the goods that are contained in them. Meanwhile, because the levy is universal and non-discriminatory relative to the income of consumers, it fails the equality canon of Adam Smiths taxation canons. All consumers regardless of income are taxed in the same way for every carrier bag purchase. On the other hand, one can also say that richer people would have less of a problem buying more carrier bags than poorer people, and so in this way the tax is equitable and passes the equality canon. The massive reduction means though that all consumers regardless of income seem to be shunning carrier bag purchases, in which case the levy fails the equality canon, because in effect the poor are taxed disproportionally higher levies relative to their income as compared to the rich (BBC 2013; Ikeda 2012; Smith n.d.; Department of the Environment Northern Ireland 2014; Clark 2014; NIDirect Government Services 2013). Meanwhile, one can say that the levy passes the criteria of certainty and convenience of payment canons in Adam Smiths taxation canons. The tax liabilities are explicitly stated, and the time and manner of collection are laid out explicitly. There are no guesses with regard to when and how much, and how the payments are going to be made. The tax take is simply a function of the number of carrier bags purchased. The role of the retailer is laid out, and the procedures for payment, collection and remittance of the levy payments are well laid out, removing procedural ambiguities too. The rules are itemized and well-crafted and disseminated via the Internet in ways that can be easily understood by anyone. In this way the certainty canon is satisfied. Finally, the convenience canon is satisfied too, because the time and manner of collection coincides with the consumers payment for the goods at the retailers, while they are physically present in the retailer locations. There is no need for a separate process just for the payment of the bag levy that is apart from the normal process of buying the goods from the retailers. The absence of any additional effort removes any barriers to payment also, and therefore allows for the tax to pass the Smith tax canon on convenience (BBC 2013; BBC 2013b; BBC 2013c; Department of the Environment Northern Ireland 2014; Clark 2014; NIDirect Government Services 2013; Ikeda 2012; Smith n.d.). References BBC (2013). Plastic bag charge to be introduced in England. BBC News. [Online] Available from: http://www.bbc.co.uk/news/uk-politics-24088523 [Accessed 17 February 2014] BBC (2013b). Big fall in plastic bag use in Northern Ireland. BBC News. [Online] Available from: http://www.bbc.co.uk/news/uk-northern-ireland-23794647 [Accessed 17 February 2014] BBC (2013c). Northern Irelands new five-pence carrier bag tax. BBC News. [Online] Available from: http://www.bbc.co.uk/news/uk-northern-ireland-22047872 [Accessed 17 February 2014] Clark, A. (2014). British officials critical of slow bag tax introduction. Plastics News. [Online] Available from: http://www.plasticsnews.com/article/20140109/NEWS/140109929/british-officials-critical-of-slow-bag-tax-introduction [Accessed 17 February 2014] Clavel, E. (2014). Think you cant live without plastic bags? Consider this: Rwanda did it. The Guardian. [Online] Available from: http://www.theguardian.com/commentisfree/2014/feb/15/rwanda-banned-plastic-bags-so-can-we [Accessed 17 February 2014] Department of the Environment Northern Ireland. (2014). Carrier Bag Levy. DOENI.gov.uk. [Online] Available from: http://www.doeni.gov.uk/index/protect_the_environment/waste/baglevy.htm [Accessed 17 February 2014] Ikeda, S. (2012). On the Canons of Taxation and the Taxation of Canon The Freeman [Online] Available from: http://www.fee.org/the_freeman/detail/on-the-canons-of-taxation-and-the-taxation-of-cannon#axzz2tifXBJjC [Accessed 17 February 2014] Invest Northern Ireland. (2014). The Carrier Bag Levy- How Do I Pay the Carrier Bag Levy to DOE? NIBusinessInfo.co.uk. [Online] Available from: http://www.nibusinessinfo.co.uk/content/how-do-i-pay-carrier-bag-levy-doe [Accessed 17 February 2014] NIDirect Government Services. (2013). Carrier Bag Levy. NIDirect.gov.uk. [Online] Available from: http://www.nidirect.gov.uk/carrier-bag-levy [Accessed 17 February 2014] Smith, S. (n.d.). Introduction to key concepts in the economics of taxation. UCL Department of Economics. [Online] Available from: http://www.ucl.ac.uk/~uctpa15/Econ7008_slides1.pdf [Accessed 17 February 2014] Williams, D. (2014). DCs plastic bag tax exposed. The Hill. [Online] Available from: http://thehill.com/blogs/congress-blog/economy-budget/195273-dcs-plastic-bag-tax-exposed-as-fraud [Accessed 17 February 2014] Wilson, R. (2013). Should Denver and New York City implement a plastic bag tax? The Washington Post. [Online] Available from: http://www.washingtonpost.com/blogs/govbeat/wp/2013/10/02/should-denver-and-new-york-city-implement-a-plastic-bag-tax/ [Accessed 17 February 2014] Read More