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What effect is the 5-cent bag tax having?

Sometimes, authorities impose a tax not just to raise revenue, but to attempt to control the public’s behavior toward a perceived public good. One common example is special taxes on cigarettes. Such taxes are usually intended to encourage smokers to quit, though they also tend to be revenue generators as well.

In a local example, in 2012 Montgomery County, Maryland, began imposing a 5-cent tax for plastic and paper bags at grocery stores, convenience stores, pharmacies and so on. County leaders hoped the tax would reduce the number of plastic bags ending up in the Anacostia River and other waterways.

Has the bag tax decreased trash, and encouraged shoppers to carry their purchases in reusable cloth bag instead? The data is somewhat mixed, according to The Washington Post.

Revenue from the tax went up 3.2 percent from fiscal year 2014 to 2015. In other words, people are purchasing more bags, not fewer. In particular, chain grocery stores like Giant and Safeway are distributing more bags than before.

On the other hand, department stores, convenience stores and pharmacies reported reduced bag tax revenue. And fewer plastic bags have been found in local stream sites in 2015, and so far this year.

So, the tax seems to be having some effect, though overall Montgomery County residents are still choosing to pay 5 cents for plastic bags.

Tax laws change almost every year, and it is often necessary for local businesses to adjust how they collect and remit taxes. An experienced tax attorney can help you avoid mistakes, or represent during an audit.

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Friday, November 18, 2016

Chaya Kundra will be a panelist at the New England IRS Representation Conference on Preparer Penalties.

Preparer Penalties: Everything You Need to Know! Over time the IRS has increased its focus from individual taxpayers to tax preparers. When the IRS identifies a pattern of false or fraudulent returns, it does not hesitate to impose penalties on the return preparers. This panel will walk you through the various penalties and what preparers need to know to protect themselves.

Moderator: Amanda Evans, Green & Sklarz LLC, New Haven, CT

Panelists: Chaya Kundra, Kundra & Associates, Rockville, MD, Barbara Kaplan, Greenburg Traurig, New York, NY

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