International Review of Waste Management Policy - Department of ...

27.10 Social and Distributional Consequences
In principle, the levy may be said to have a disproportionate economic impact on
those on lower incomes. However, since the cost is low and readily avoidable this is
not likely to be a significant issue, and the survey results would appear to bear this
out.
As regards bag producers, the producers of plastic bags will have been negatively
affected, whilst those producing paper bags and ‘bags for life’ will have been
beneficiaries. The structure of production of plastic bags suggests, however, that the
prevalence of overseas production of bags may have implied that the negative impact
on bag producers was felt mostly overseas. Fehily et al (1999) carried out an ex ante
study on the impact of the tax on the plastic bag industry. 586 They estimated that in
1999, 79% of the plastic bags consumed were imported (from the rest of the EU and
certain Southeast Asian countries). Four plastic manufacturing firms operating in the
Republic produced the remaining 21%. Since then, however, one has apparently gone
out of business causing the loss of 26 jobs, but it is not clear whether this was as a s
direct consequence of the levy.
As the tax is imposed at the retail level on Irish shoppers, it does not introduce
competitiveness concerns. The Republic of Ireland shares a land border with Northern
Ireland, where there is no levy, but the costs to the consumers are such a minor
proportion of the total shopping bill, and the levy has proved, in any event, to be so
popular with the public, that it is highly unlikely that there has been any leakage of
trade across the border caused by the levy. 587
27.11 Complementary Policies
Shopping bags are packaging waste under the 2004/12/EC (Packaging and
Packaging Waste Directive). Hence, there is some complementarity with the policy on
packaging more generally.
27.12 Effect of the Policy on Pricing of Resources / Services
The policy effectively implies the elimination of a practice – the issuing of plastic bags
free of charge – which will have led (as the policy’s effects suggest) to overconsumption
of plastic bags. Whether the pricing is optimal is unclear, and the fact
that other bags may be being issued free of charge might be said to imply some
distortion of the market. Plastic bag manufacturers argue, for example, that plastic
bag production is more energy efficient (in terms of use per quantum of ‘bag
packaging’).
586 Fehily, Timoney & Company (1999) Consultancy Study on Plastic Bags, Report prepared for the
Department of Environment and Local Government, Dublin.
587 Simon McDonnell and Susana Ferreira (2007) The most popular tax in Europe? Lessons from the
Irish plastic bags levy, Environmental and Resource Economics, September 2007, vol. 38, no. 1, pp. 1-
11(11).
495
International Review of Waste Policy: Annexes