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Bag levy a green improvement, but councillors still aim to kill fee

Toronto, October 09 2009 Re-usable shopping bags photographed for supplements section at the Globe and Mail studio on Front St., Toronto.

Fernando Morales/The Globe and Mail

Toronto's five cent levy on the lowly plastic bag has been a successful social experiment, changing the way people shop. A bid to take the city out of the equation – making the continued collection of the fee voluntary – puts public policy makers on a collision course with retailers and raises the question of whether the reusable bag revolution will stall.

Mayor Rob Ford, who wants to scrap the bag tax, has said he so dislikes paying for bags that he tries to avoid shopping at Loblaw Cos. Ltd. – one of the earliest adopters of the levy. His brother, Councillor Doug Ford has called it an unnecessary surcharge that retailers have been pocketing for years.

Major retailers insist that most, if not all, of the funds are directed to green or community causes. (Loblaw, the country's largest grocer has donated $4-million to WWF Canada from the fee proceeds since 2009, although the company doesn't break down how all the money from bag fees is spent.) Ultimately, the nickel levy has transformed behaviour. In the past three years, it has cut in half the use of plastic bags in Toronto, according to municipal figures.

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While Los Angeles began the process of becoming the largest U.S. city to bring in a bag levy this week, in Toronto, the question of whether or not to ditch the fee goes before city council in early June, and pressure is mounting on retailers to come clean about what they do with all the money they collect for the bags.

"As a retail industry we know we can do a bit more," said James Gray-Donald, associate vice-president and sustainability leader at Sears Canada Inc. "There hasn't been the level of clarity and consistency among all retailers about what happens to the collected fees."

For retailers, the levy has turned out to be something of a public relations win, helping enhance their image of caring about the environment at the same time as it helps them save money through efficiencies.

"There is social pressure now not to use plastic bags," said Antonia Mantonakis, marketing professor at Brock University in St. Catharines, Ont. "Consumers are more conscious about it today ... But it would be beneficial for them to know where the [bag fee]money is going."

Loblaw is a flashpoint in the debate because its executive chairman, Galen G. Weston, has made the environment and reusable bags pet projects. The retailer first started to charge for bags in 1987 at its discount No Frills outlets, expanding it five years later to its Real Canadian Superstores. It has since spread to Ontario and Quebec. The charge was eliminated in some Atlantic Canada markets after a customer outcry.

Mr. Weston wouldn't comment, but spokeswoman Julija Hunter said Loblaw has slashed the number of plastic bags it dispenses by 71 per cent nationally, or 3.8 billion, since 2007. "Our goal is to reduce the number of plastic shopping bags in use, not collect nickels," she said.

Sears, which donates about 10 per cent of the bag proceeds to Environmental Defence and Kids Cancer, has reduced the use of plastic bags by 41 per cent since 2007, Mr. Gray-Donald said. The retailer enjoys no added revenues from the fee, he said. Its research found that customers are willing to pay the levy if they're clear on its purpose of helping the environment. Loblaw's research found that 84 per cent of Torontonians support a fee to reduce plastic bag use, Ms. Hunter said.

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In Toronto, the fee has cut plastic bag consumption 215 million bags annually (53 per cent) since 2009 and generates an estimated $5.4-million in annual revenue for merchants, according to a report from city staff.

Even if Toronto dropped the fee, there is no guarantee retailers would stop collecting it. Killing the levy does not go down well with some retailers who use proceeds to support local causes.

Earlier this spring, when vandals torched a beloved wooden children's play structure in High Park, two local Canadian Tire stores used the proceeds from the fees to make a $10,000 donation, spokeswoman Sarah Van Lange said. Last year, all 21 Toronto stores pledged $65,000 from bag fees for school, police and other local environmental initiatives.

"I would hate to see them go back and not collect the 5 cents any more. That would be a disaster," said Ted Mangnall, who runs a Canadian Tire store on the Queensway in Toronto. "I think all around it's a wonderful thing that the city did."

Even if consumers gripe about the fee, a rule of consumer behaviour says that an added cost has to be at least 10 per cent of the total before it's even noticed, said Ken Hardy, professor emeritus of marketing at the Ivey School of Business in London, Ont. "I'm sure people are not objecting to the amount – they object in principle, like Mayor Ford."

Mr. Ford has described it as an unnecessary tax that has to go.

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"People don't want it. They've told me over and over," he told reporters when his executive committee moved to kill the fee.

Mr. Ford says it's up individual businesses to decide if they want to continue to collect the fee and donate it to a worthy cause. "I'm not going to force people to pay that five cents any more," he said.

Toronto retail consultant John Williams said individual merchants will have to gauge customer reaction if the fee is no longer required by the city. But he believes most consumers have changed their habits and are using fewer bags.

"I think the mayor is out of touch on this one," he said. "If I were a retailer I would leave the charge, but they have to do something positive with that money."

Mr. Ford and his executive committee are not alone in opposing the bag levy. Orillia City Council this month voted to repeal its mandatory fee after finding it didn't reduce waste significantly and spawned other problems – like bacteria-filled reusable bags.

Andrew Hill, the Orillia councillor who championed the end of the levy, said reusable bags are not necessarily the greenest option.

"The reusable bags are not recyclable anywhere in Canada, let alone North America," he said. "The plastic shopping bags are 100% recyclable."

With files from Jeff Fraser

Editor's Note: Loblaw has cut the number of plastic bags it dispenses by 3.8 billion since 2007. Incorrect information appeared in a previous version of this article.

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About the Authors
Retailing Reporter

Marina Strauss covers retailing for The Globe and Mail's Report on Business. She follows a wide range of topics in the sector, from the fallout of foreign retailers invading Canada to how a merchant such as the Swedish Ikea gets its mojo. She has probed the rise and fall (and revival efforts) of Loblaw Cos., Hudson's Bay and others. More

Toronto City Hall bureau chief


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