preview

Plastic Bag Tax In Australia

Decent Essays

The objective of this report is to illustrate the effect of the implementation of a plastic bag tax in Australia. By providing a brief overview of issues, correlated with plastic bag consumption in conjunction with current and proposed changes to policies in Australia. Through the application of economic theory, it can determined whether a tax would decrease consumption and through supporting evidence indicating its efficiency when applied in practice.
Australians approximately use 6.9 billion plastic bags per year (Errata Nolan ITU, 2002). The high consumption of plastic bags highlights one outstanding issue. The adverse impact, consumption and disposal of plastic bags have towards the environment. This involves the resources used to make …show more content…

Resulting, as shown in figure 3, in reduced consumption and creating a better socially efficient outcome. Comparing figures 2 and 3, it is evident that without the tax, overconsumption can occur as external costs are not always implied meaning decreased awareness of the issue.
As seen from both Figure 2 and Figure 3, the application of negative externality of consumption is appropriate, as it clearly indicates the before and after results of the implementation of the tax. As clearly shown, overconsumption leads to social inefficiency, but by applying a tax, a decrease in the consumption of plastic bags can allow for a shift of the market. The increase in social efficiency also allows for social cost and benefit to be equal. By applying taxes on the plastic bag negative externality it allows for a reduction in the supply of plastic bags. Due to this tax, the supply curve S1 will shift upwards to S2. This will inherently also reduce the gap between Qefficient and …show more content…

Both countries implemented similar taxes, whilst Ireland had the largest decrease in consumption, the tax was successful to a lesser extent in South Africa (Dikgang, Leiman, & Visser, 2012). The differences between Ireland and South Africa, was the larger public awareness of the tax in Ireland (Killian,2005). A problem that both countries faced was that most of the retailers were burdened with implementing the tax decreasing its proposed effectiveness (Killian,2005) (Dikgang, Leiman, & Visser, 2012). The basic issue that arose was, there needed to greater public awareness and that better monitoring and effective implementation measures were necessary in the early stages. In South Africa, for example, a short term effect was a decrease in consumption. Long term, there was a steady increase in the demand for plastic bags as consumers became accustomed to the higher prices demonstrating the diminishing effectiveness of the South African levy (Killian,2005). Whilst in contrast, the Irish levy had a sustainable decrease of consumption (Convery et al., 2007),. Later on, South Africa adjusted the tax to allow for a partnership between the government and retailers. This clearly indicates potential limitations of the introduction of a tax in

Get Access