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Bag Tax Surprise: It's For ALL Retail Bags, Plastic AND Paper

By Patty Wetli | January 27, 2017 5:44am
 Chicago's 7-cent bag tax will take effect Wednesday and it applies to all retail bags, both plastic and paper.
Chicago's 7-cent bag tax will take effect Wednesday and it applies to all retail bags, both plastic and paper.
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Shutterstock; Flickr/Raychel Mendez

LINCOLN SQUARE — For those who haven't been paying close attention, Chicago's 7-cent bag tax will take effect Wednesday and it applies to all retail bags, both plastic and paper.

Unlike the ineffectual plastic bag ban, which targeted chain stores and was all but dead on arrival courtesy of a loophole that saw companies swap out filmy bags for ostensibly "reusable" thicker plastic, the new per-bag tax will hit retailers of all sizes — from Mom & Pops to global conglomerates — in all sectors, from groceries to clothing to tchotchkes.

The tax also extends to paper bags, meaning stores such as Trader Joe's, J. Crew, and Crate & Barrel will be affected.

If that comes as news to a lot of consumers, it also caught a good number of small business owners — the very folks responsible for collecting the tax — unaware as well.

Kate Merena, owner of Sacred Art at 4619 N. Lincoln Ave., said her first official communication from the city regarding the tax arrived on Jan. 18, though she'd already been tipped off by another shopkeeper via Instagram.

"I run a networking group of 100 women on Facebook, about 40 of us own businesses, and nobody had heard of it," Merena said of the tax, which was approved by City Council in November

"I thought I was behind the curve; it turns out I was on the front end," she said.

"We were not aware this was being proposed by the city. The whole thing took us completely by surprise," echoed Carly Katz, co-owner with husband Joe of Bottles and Cans, 4109 N. Lincoln Ave.

"We would not have supported it if we were given a chance to voice our opinion," Katz said.

The tax escaped the attention of small business owners like Katz and Merena not only because the former bag ban hadn't applied to Mom & Pops, but because the shopkeepers provide customers with paper totes and the city heretofore had focused entirely on plastic.

"Having had a plastic bag ban in place last year, it just seems odd that they would repeal that and opt for a tax instead," Katz said.


PSA... coming 2/1/17....

A photo posted by Bottles and Cans (@btlsandcans) on

This post is how other business owners learned about the bag tax.

Mary Kay Accurso, a spokeswoman in the Mayor's Office, told DNAinfo via email that in addition to information packets, like the one Merena received last week, the city's outreach has included posting online the bag tax ordinance and an accompanying FAQ. The city has also spread the word about how to collect and send in the tax through chambers of commerce, aldermanic offices and neighborhood business organizations, she said.

Business owners counter that they were left to their own devices until extremely late in the process, trying to decipher a clunkily worded ordinance that, among other stipulations, requires them to pay the tax in advance on their existing bag inventory.

"This is called a floor tax and is very common when implementing a new tax," Accurso said. "Businesses in Chicago are familiar with this floor tax process as it was recently required for the bottled water tax."

For a small gift shop owner like Merena, who already wears multiple hats and doesn't have spare workers to tally bags, the concept of a "floor tax" was a new one and creates an added burden.

"I have to count what's in my basement and write a check," Merena said. "Every time I order bags, I have to fill out a form and pay in advance. Why the extra paperwork?"

How Did We Get Here?

So how did Chicago go from introducing a plastic bag ban one minute and then scrapping it for a plastic and paper bag tax the next?

To Elektra Musich, who co-owns Everlasting Fire Studio at 5036 N. Lincoln Ave., the tax smacks of a money grab by the city, not an environmental policy.

"Plastic bags are seriously problematic, and this new tax doesn't help," Musich said.

Retailers such as Target can go back to using thin and flimsy bags and can opt to absorb the cost of the tax rather than charge consumers, she said, while other forms of plastic, ranging from restaurant carryout bags to dry cleaning bags, aren't taxed at all.

"I think if the environment was a goal, a removal of plastic would be a better start," Musich said. "I'd like to see the city actually make plastic not an option at all first and move from there."

But the goal was never the eradication of plastic, said Jordan Parker, founder of Bring Your Bag Chicago, an advocacy group that helped shape the city's bag tax law.

"The goal was to curb disposable bag usage," Parker said.

Paper bags might seem more green than plastic — for starters, unlike plastic bags, they can be recycled through the city's Blue Cart program — but they are still typically only used once, she noted, and they're still disposable, a word Parker said should be changed to "land-fillable."

"What we've seen is that bans alone do not work. When you ban one type of bag ... people just move to whatever bag is free," Parker said. "The real problem is giving away bags for free.... We're used to free to-go crap and we just throw it away."

Parker agreed with people like Musich who argue the bag tax leaves all sorts of other plastic trash on the table.

"Baby steps .... We can't address everything at once," Parker said. "Disposable checkout bags are low-hanging fruit."

Once it became clear the bag ban wasn't working, Bring Your Bag Chicago collaborated with Mayor Rahm Emanuel's sustainability team and entities including the Sierra Club and the Illinois Retail Merchants Association to draft the bag tax ordinance.

Taxes, Parker said, have proven more effective in changing behavior because they create awareness.

"When a person says, 'Do you have your own bag? Do you want to buy a bag?' that has the greatest impact. You are going to be alerted you are paying for that bag," she said. "It's more than the 7 cents, it's the conversation that takes place."

Who's Doing the Talking?

The problem, both Parker and business owners said, is that the city should have started those conversations — with consumers and retailers — months ago.

"Whenever you're talking about changing human behavior, there's the legislative side and public education," Parker said.

"We've been fighting for good policy ... we finally got good policy ... but that's only half the equation," she said.

"You see this all the time with environmental campaigns," which are typically spearheaded by volunteer-run organizations, Parker said. "There isn't funding to share information."

Among the battles Bring Your Bag lost, she said, was a requirement in the ordinance to funnel bag tax proceeds into a fund for environmental education and causes.

She pointed to the example of San Jose, Calif., where the mayor hired a dedicated staffer to oversee the rollout of a bag tax — a year in advance of the surcharge hitting consumers — and set aside a budget for a campaign that explained the why, the what and the how.

"That's what the ideal situation would be," Parker said.

Accurso said the mayor's office is taking advantage of "free city advertising space, including the city's digital billboard inventory" to inform consumers about the impending tax.

In addition, a "day of action" is planned for Wednesday, with the city encouraging business owners to give away free reusable "ChiBags," Accurso said.

Jewel-Osco will give away reusable bags to the first 100 customers at each of its Chicago locations on Saturday, and Whole Foods will hand out 1,000 free resusable bags on Wednesday. Throughout February and March, ChiBags will be distributed to WIC offices, aldermanic offices and other community locations, she said.

Business owners are worried the city's message won't reach the majority of consumers and that it will be up to them to deliver the bad news.

"I think the city has signed us up for a huge amount of emotional labor," Merena said. "We're the messenger — people will be angry at us. We'll have some customers angry we're not absorbing the cost."

Will It Work?

Though she had a hand in crafting the bag tax ordinance, Parker is taking a wait-and-see approach as to whether the fee will succeed where the ban failed.

Will the environmental message of sustainability and reusability resonate with Chicagoans? Is the 7-cent tax enough to discourage disposable bag use? Will large-scale retailers simply eat the cost? How will the city police retailers' bag inventory?

There will always be people who insist on a disposable bag, and there will be situations where a reusable bag isn't handy, but ultimately the bag tax, whatever its flaws, is a step in the right direction, Parker said.

Disposable bags are "very much a symbol of our problem with pollution" and attempting to reduce their use "serves as a gateway to an understanding of larger sustainability issues," she said.

"Awareness can begin with a bag," Parker said. "It's a tangible issue and we're taking it to the next level. It's bigger than a bag."