If there’s a new way to tax the residents of Maryland, it’s a good bet that our politicians will try to enact it. That’s why I’ll continue to point out why a bag tax is a bad idea. The idea to impose an excise tax on plastic bags given away by stores is one that has popped up in a few places (most notably Washington, D.C.), but has yet to be imposed statewide in Maryland. When the General Assembly convenes next year, however, I’m sure there will be another bill to impose this tax. A new study by the Beacon Hill Institute shows why the state should not do this.

One of the goals of a bag tax is to reduce usage of plastic bags. But as the new study shows, after an initial consumer shock and a resulting decrease in plastic bag sales, consumers begin to buy more bags. This “rebound effect” has led to an increase in bag taxes as politicians seek to continue to drive consumers away from plastic bags. The study looks at Washington, D.C., and predicts that the city will need to increase the bag tax by 60% to achieve 90% of the initial reduction in plastic bag use.

To put it another way, if Maryland were to enact a bag tax, it’s highly likely that the tax rate would be raised significantly in the years following enactment.

In its analysis, the Beacon Hill Institute attempts to quantify just how many jobs and how much economic loss such a tax increase would cost Washington, D.C. I am skeptical of such precise economic modeling, so I don’t give their numbers too much credence. However, the principle the Institute uses to underlie its modeling is undeniable:

All other things being equal, consumers will allocate a portion of their spending to the Bag Tax or divert spending outside D.C. to avoid the tax ─ both will reduce consumption spending in D.C. As a result, retail businesses will see a reduction in sales and profits and, in turn, reduce their employment and investment expenditures leading to lower wages and income.

The same would be true of Maryland if our policymakers enacted a bag tax.

No matter how you look at it, a bag tax is bad news for Maryland consumers. My other blog posts have pointed out that the environmental rationale for this tax is weak. The economic case against it is strong. With all of the problems weighing down Maryland’s economy, we surely do not need another drag on job creation or economic growth. Let’s hope that, once again, the proposal for a statewide bag tax is trashed in the General Assembly.