The Bag Tax : An Interesting Success Story

What is Bag Tax

An alternative to banning plastic bags is the introduction of a bag tax. Ireland introduced a bag tax and has reported a reduction in the use of plastic bags by 90%. Charging for plastic bags helps to give a focus as to whether a plastic bag is entirely necessary.

The Irish Waste Management (Amendment) Act 2001 provided for a levy of up to 0.19 Euro  to be applied to some plastic shopping bags (there were exemptions for a range of bags including small bags used for fresh meat, fish, fruit, vegetables and reusable bags sold for 0.70 Euro or more).

How bag tax was implemented

It was originally planned to impose a levy of 0.13 Euro on suppliers but the tax authorities advised that it would be impossible to control imports, so it was decided instead to levy the tax at the retail stage. This meant the administrative costs of collecting the levy would be much higher (there are about 30,000 retailers), so the levy was set at 0.15 Euro.

The levy applies at the point of sale in supermarkets, shops, service stations and all sales outlets. Retailers are obliged to pass on the full amount of the levy as a charge to customers at the check-out. It is enforced by local authorities.

The Office of Revenue Commissioners has responsibility for collecting the levy, which has been integrated into the VAT collection system. The Waste Management (Environmental Levy) (Plastic Bag) (Amendment) Regulations 2007 replaced the original 2001 Regulations from 1 July 2007 and the levy was increased to 0.22 Euro per bag. 

In June 2008, the increased cost has had only a small effect on the number of bags purchased.  In 2006 120 million bags were bought generating 18 million Euro.  In 2007 this dropped to 100 million but, because of the higher cost per bag, it generated 22 million Euro.

Income from the levy
2003 – 12.7 million euro
2004 – 15 million euro
2005 – 17.5 million euro
2006 – 18 million euro
2007 – 22 million euro

Above facts and points are pen down as per the opinion and knowledge of the Author. Author Mr. Navneet Kumar will be happy to receive your comments on the same at contact@navneetkumar.com