Use of Plastic Bags in Australia: An Economic Perspective
Day-to-day activities necessitate the use of carrier bags. Plastic bags are often used in packaging and wrapping of commodities such as foods and personal effects making them popular in the society. However, plastics are non-biodegradable, a property that challenges their appropriateness considering the effect they have on the environment.In a bid to protect the environment, there have been proposals to minimize the use of plastics. Nevertheless, such strategies would be of significant economic concern. This paper applies an economic perspective to look into Australia’s case on plastics use.
A Brief Overview
In the year 2015, Australia was reported to have used more than 5 billion lightweight plastic bags (Boomerang Alliance, 2015). Compared to the year 2007, the use of these single-use plastic bags had almost doubled. Up to the year 2005, there had been a voluntary program where retailers were to reduce the use of plastic bags by a 50% figure. However, plastic use rose again after the program was over.
Increased plastic use and failure to recycle these non-biodegradable commodities have contributed to littering and landfills in the country. Statistics indicate that the number of bags littering the country as landfills is approximate 5 million on a yearly basis (Boomerang Alliance, 2015). Plastic bags are also easily carried by wind and water hence causing pollution in areas far away from their point of disposal. In Australia, they have been reported to block drainage systems and harming the marine life by interfering with air circulation and food availability (Norden, 2014). Indeed, the Australian Registry of Wildlife recorded 30 cases where organisms of 9 different species had died with post-mortem test showing harm by plastic (Boomerang Alliance, 2015).These species range from mammals, birds, fish, and reptiles.
Just like other continents and countries, Australia has enacted various policies to discourage the use of plastics. These include bans and levy actions being implemented time over time. Bans on single-use plastic bags have been enacted in Tasmania, the Northern Territory, South Australia, and A.C.T (Norden, 2014). Reduced plastic use in these regions has been marked with better outcomes on environmental protection. In most cases, the bans have received appreciable consumer acceptance and people have shown intent to reduce the use of plastics. Other states in Australia considering banning plastic use include Queensland.
Figure 1: Graph showing disposal of plastic waste in different Australian states in and 2006 and 2007
Source: Australian Bureau of Statistics (2010)
Economic Theory on Taxation of Plastic Use
The taxation theory can be applied in Australian government’s strategy to curb the increasing use of plastic bags. As Kaplow(2010) wrote, the theory acknowledges that governments can impose taxes mostly for two reasons. First, taxes are unquestionably an effective way to collect revenues that fund governments. Second, the government can use taxation as a measure of social control. In the latter, the government purposely targets practices it would wish to discourage such as illegal activities and activities that harm the society to an irritating extent. However, in some cases, governments tax their subjects for both reasons.
In the case of interest, principles of the taxation theory imply that increased taxation on plastic bags would be an effective approach of handling the problem by various mechanisms. It is worth noting that the market fails to use plastic bags to only the efficient extent due to questionable reasons. For instance, consumers focus on the short-term benefits of the papers rather than their long-term consequences. Additionally, the market exploits the papers based on their availability which masks the reasoning that the papers in turn cause increased littering.
By increasing taxation on plastic bags, the government will decrease the use of the products by making them uneconomical to use more so if they are disposed after one-time use. Increased taxation will mean higher cost of the bags and retailers would either have to charge higher on their products or seek alternative means of packaging or wrapping their products. The move will in turn encourage consumers to reuse the bags or avoid their use at all. Eventually, there will be a reduced demand for the papers, and the market will use them to the minimum level possible.Increased taxation will also generate more funds for the government. These funds can be reciprocated to the campaign on environmental protection and promoting alternative means for packaging and wrapping goods.
Figure 1: A conceptual model for the taxation theory as applied in strategies to reduce the use of plastic bags
The Effectiveness of the Bag Tax
The bag tax may or may not work for Australia. First, it should be noted that the tax may not only work from the perspective of the cost, but it might also work by creating public awareness. People will gain more interest in environmental pollution, the role of plastic bags in the situation, and the need to carry out protective measures (Plastics and Chemical Industries Association, 2012). When people learn about the situation, they are most likely to cooperate in the move to minimize the use of plastic bags. The approach will also be double-sided in that those who would not support taxation may just opt to use other alternatives or reuse the papers to avoid the extra cost.On the same perspective, people will be encouraged to seek more durable and reusable bags in place of the single-use type. There will also be increased willingness to use biodegradable bags as their price will be considerably lower than that of the non-biodegradable ones.
On the other hand, there are significant chances for the strategy to fail.Most obviously, plastic bags are essential and they provide a convenient means of carrying basic products. The high level of convenience associated with them in comparison to other types of bags may limit the effectiveness of their increased price in deterring people from using them. Additionally, the bags offer a better means of carrying certain types of commodities and their use may not reduce as much even after their increased cost.
The use of taxation in Australia as an approach to discourage the use of plastics can be compared to the case of the UK. In the UK, the concept of increasing the tax of plastic bags has worked on circumstances similar to those of Australia. The Department of Environmental Food and Rural Health explained that retailers had generated a significant amount of money that was in turn used to fund wellness programs in the country. However, it should be noted that unlike the proposed concept of taxation, the strategy used in the UK was not termed as taxation, and the government does not take the money. Instead, retailers were to handle the extra charge though they were required to use it on wellness programs and report their expenditure to the government (2015).
The use of plastic bags should be discouraged in Australia. Data shows that programs to discourage the use of the materials have significant impact. This is an indication that the problem can be solved. Raising the value of tax on these commodities is a promising approach. Nevertheless, it should be noted that taxation as a way to reduce the use of plastics has both strengths and weaknesses.
Australian Bureau of Statistics. (2010). Australian Environment: Issues and Trends. Retrieved from http://www.abs.gov.au/ausstats/abs@.nsf/lookup/4613.0chapter40jan+2010
Boomerang Alliance. (2015). The facts on plastic bags. Retrieved from http://www.boomerangalliance.org.au/the_facts_on_plastic_bags
Kaplow, L. (2010). The theory of taxation and public economics, Princeton: Princeton University Press.
Norden.(2014). Economic policy instruments for plastic use. Retrieved from http://norden.diva-portal.org/smash/get/diva2:791794/FULLTEXT02.pdf
Plastics and Chemical Industries Association. (2012). Plastic recycling in Australia remains strong. Retrieved from http://www.pacia.org.au/mediacentre/media19012012
The Department of Environmental Food and Rural Health. (2015). Carrier bags: Why there is a charge. Retrieved from https://www.gov.uk/government/publications/single-use-plastic-carrier-bags-why-were-introducing-the-charge/carrier-bags-why-theres-a-5p-charge