Plastic bag tax is a market-based instrument used to discourage the use of SUPBs (Karlaitė 2016; Xanthos & Walker 2017). In its application, PBT is construed as part of environmental tax reforms aimed at mitigating the effects of pollution and climate change (Miller & Vela 2013). In some jurisdictions, PBT is framed as a levy, fee or charge (Muralidharan & Sheehan 2016). Thus, the terms ‘tax’, ‘fee’, ‘levy’ and ‘charge’ are interchangeably used in this discussion. The overriding objective of the PBT is to change the widespread behaviour of using SUPBs (Convery et al. 2007). From an economic perspective, the PBT is construed as a mechanism that compels polluters to bear the cost of environmental harm caused by SUPBs (Wagner 2017). From a consumer behaviour standpoint, PBT is aimed at disrupting the habitual use of SUPBs and fostering the performance of pro-environmental behaviour (Poortinga, Whitmarsh & Suffolk 2013).

In terms of implementation, PBT takes the form of either extended producer responsibility charge or indirect tax (Singh & Sharma 2016). Extended producer responsibility charge is imposed on producers whose activities are known to pose environmental harm (Bury 2010). It is an upstream charge internalised by the producer and is set at an amount that is as nearer as possible to the social cost of the negative externality to the society (Wagner 2017). This form of tax is regarded as effective because it compels corporates to engage in good environmental citizenship behaviours (Bury 2010).

Conversely, indirect tax is a downstream charge which is meant to be internalised by consumers at the point of purchase (Bury 2010; Eurostat 2016). Plastic bag tax in the form of indirect tax is criticised for being regressive because it imposes the financial burden on consumers exempting corporates with large carbon footprints (Hagman et al. 2015). Indirect tax is also associated with high administrative costs such as collection costs and monitoring of retailer compliance. For instance, Convery et al. (2007) reported that initial PBT administrative costs in Ireland were more than €1.2 million. This administrative burden was also reported in Botswana where the government admitted its failure to fully track and collect PBT from retailers (Mogomotsi, Mogomotsi & Phonchi 2019).

There is no consensus on the best approach to determine the optimum level of PBT (Dikgang et al. 2012; Stephenson 2018). Extant literature is dominated by two approaches, that is, Pigouvian and price elasticity of demand. Pigouvian tax was popularised by Pigou (1960) who is regarded as the doyen of environmental tax. The Pigouvian approach sets the optimum level of tax by calculating the marginal external cost associated with a negative externality (Pigou 1960). The major failing of this approach is the inherent challenge associated with determining the optimum amount of tax that is commensurate with the respective environmental harm (Parry 2012; Stephenson 2018). With regard to PBT, Stephenson (2018) notes the challenge of determining the marginal damage caused by each discarded plastic bag. It is also reasonable to argue that the marginal external cost of plastic bag litter differs from land and coastal environments. In such instances, Digkang et al. (2012) challenged the economic wisdom of using a blanket PBT rate.

Using the price elasticity of demand approach, the PBT is set based on the relationship between the price of the plastic bag and the quantity of plastic bags demanded at the point of purchase (Nolan-ITU 2002). Unlike, the Pigouvian approach, this approach considers the income distribution of consumers and allows for a customised PBT structure (Dikgang, Leiman & Visser 2010). However, this approach has its own limitations. In economic theory, price elasticity of cheap products is known to be low (Stigler 1996). As the plastic bag often contributes an insignificant portion of a consumer’s grocery bill, the PBT often lacks a deterrent effect. Another challenge, which was reported by Dikgang et al. (2012), is the challenge of assessing accurate pre-tax and post-tax plastic bag consumption statistics from retailers. Because of the challenges described above, Stephenson (2018) argued that the majority of PBT amounts tend to be more arbitrary than objective.

The reason behind the use of PBT gains theoretical support from the prospect theory. The theory posits that individuals’ trait of loss aversion predisposes them to engage in acts that translate in gains and avoid behaviours that are associated with losses (Kahneman & Tversky 1979). In this context, the desire to avoid a loss associated with a tax is expected to motivate consumers not to use SUPBs. From a psychological perspective, the introduction of a tax on goods previously offered for free has the effect of inducing a shock reaction amongst consumers, which has the potential of constraining demand in the short-term (Kahneman, Knetsch & Thaler 1990).

The effect of a PBT is also assumed to be influenced by how it is framed. This view gains theoretical support from the framing theory, which posits that the framing of messages influences their effect in stimulating behavioural change (Goffman 1974). Consistent with the tenets of the framing theory, Borean (2013) observed that consumers perceive that the payment of a tax is mandatory whilst a fee or levy is voluntary. This view was also confirmed in a study by Muralidharan and Sheehan (2016), wherein a plastic bag charge labelled as a tax was found to be more effective than one framed as a levy or fee in changing behaviour related to the use of plastic shopping bags.

A case study was deemed appropriate for this study because it is recommended for analysing context-dependent phenomenon with multiple sources of information (Creswell & Poth 2018; Stake 2005). There are differences in contextual factors that influence the implementation of PBT per each jurisdiction; and for this reason, the case study approach was considered appropriate. Also, the purpose of this study was to conduct a comparative analysis of identifiable countries that have implemented PBT. This was another key consideration for employing a case study design.

The case studies were drawn from a list of countries that have implemented PBT (Table 1-A1). The inclusion and exclusion criteria were as follows: the cases were only drawn from PBT implemented by national governments as it permitted researchers to draw policy implications. Voluntary plastic bag fee arrangements were not considered in this study. A period of more than 15 years after the implementation of the PBT was used as the appropriate time frame as it provided longitudinal data adequate to assess the effectiveness of PBT. Using purposeful maximal sampling, Denmark, Ireland and South Africa were selected. This sampling technique allowed for the selection of case studies that showed different perspectives on the research problem (Creswell 2012; Yin 2009). Denmark and Ireland reported success with PBT albeit with different PBT structures, whilst South Africa achieved very limited success. The three countries selected are all committed to maintain the pristine environment of their coastal and land environments. Thus, the case studies were purposively sampled in order to illustrate distinct approaches in the implementation of PBT.

Data were collected in South Africa, Denmark and Ireland. The three countries were selected for their difference in the manner they implemented PBT. Data were collected using document analysis because it is regarded as a key source of data in case studies that focus on public policy (Nielsen, Homberg & Stripple 2019; Yin 2014). Consistent with this view, policy documents, government reports, environmental organisation reports and peer-reviewed literature were used as data sources. Following the approach of Xanthos and Walker (2017), electronic databases such as SCOPUS, ProQuest, Web Science and EBSCO were searched systematically to gather data using keywords such as ‘PBT’, ‘levy’ or ‘charge’. Data were collected for a period of 4 months, from February to May 2018. The following subsections provide the case study description.

This article followed all ethical standards for research without direct contact with human or animal subjects. Reference number: FOM2017.

One of the critical factors for the success of any policy instrument, including PBT, is acceptance by key stakeholders. The Irish case demonstrates the importance of stakeholder mapping. The Irish government consulted key role-players such as manufacturers, retailers and consumer groups. Plastic bag tax awareness campaigns were also conducted to educate all stakeholders on the benefits of PBT. This resulted in a broader acceptance of PBT, smooth implementation and enforcement. Turning to South Africa, Hasson et al. (2007) reckoned that consultation was not comprehensively conducted in South Africa, and it resulted in resistance from manufacturers which led to the reduction of the tax in 2008. Similarly, Dikgang et al. (2012) attributed the poor support of the PBT in South Africa to limited pre-emptive advocacy campaigns aimed at consumer education. If the introduction of PBT reflects stakeholders’ will as in the Irish case, the possibility of success is high. Conversely, PBT is bound to fail if it is used as a tool to coercive reluctant value chain stakeholders to change behaviour.

The Ireland case demonstrated the importance of conducting a baseline assessment before PBT implementation. An analysis of the magnitude of the plastic bag litter problem and concerns of manufacturers and retailers was performed before tax roll-out. More importantly, an assessment of the amount consumers were willing to pay for a plastic bag enabled Ireland authorities to set a PBT amount that had a deterrent effect. A baseline assessment could have assisted South Africa to implement a PBT structure appropriate for a developing country. For instance, the current blanket rate is being criticised for being regressive (Dikgang et al. 2012; UNEP 2018). This is because as observed by UNEP (2018), in developing countries such as South Africa, plastic bags remain the most affordable means of carrying merchandise by low-income earners. As such, efforts to prohibit its use without affordable alternatives are likely to achieve limited success.

The Irish and Danish cases demonstrated that good governance is central to the success of PBT implementation. Plastic bag tax is an environmental issue and should be managed by environmental departments as is the case in Ireland and Denmark. In South Africa, the role of the Department of Environment Affairs in the implementation of PBT is not clear. To provide an independent oversight, the Environmental Fund and the Danish Ecological Council monitor the implementation of PBT in Ireland and Denmark, respectively. In Ireland, commissioners who manage the Environmental Fund are responsible for PBT revenue collection including monitoring retailer compliance (O’Neil 2016). In Ireland and Denmark, there is transparency and full disclosure of the revenue generated from PBT (Convery et al. 2007). Moreover, revenue from PBT is ring-fenced and is used to finance environment-enhancing projects. Conversely, in South Africa there is a veil of secrecy about how PBT revenue is utilised (McLellan 2014). In addition, critics of the plastic bag levy in South Africa argue that it is being used as a revenue generation scheme by the government to fund fiscal deficits with little being devoted to environmental sustainability projects (O’Brien & Thondlana 2019). Again, in Ireland, the roles of the Department of Environment and Commissioners are clearly defined. This form of transparency, according to Baranzini and Carattini (2017), is critical for the acceptance of PBT as a policy instrument.

The Irish case also points to the importance of continuously reviewing PBT in order to maintain its deterrent effect. Ireland reviewed its PBT from €0.15 to €0.22 in 2007 and to €0.44 in 2009 and in this way the deterrent effect of the tax was sustained (Xanthos & Walker 2017). Although South Africa now reviews PBT almost every 2 years, the rate of ZAR0.08 as of 2017 was too little to enhance any behavioural change amongst consumers. This could be one of the most plausible reasons why the use of SUPBs is escalating. Dikgang et al. (2010) concurred that a small amount of PBT often constitutes a negligible amount of the household budget which often goes unnoticed. In its current form, the PBT in South Africa can be best described as a nudge, not a tax. In order to set an optimum and effective amount of PBT, Dikgang et al. (2010) stressed the importance of evaluating the effect of the PBT on the elasticity of plastic bag demand. This approach, according to Poortinga et al. (2013), has the potential of setting a tax amount that has a restraining effect on the use of SUPBs.

The Danish case also illustrates the importance of adopting an integrated value chain approach in implementing PBT. The Danish PBT was shared by manufacturers, retailers and consumers. This addresses perceptions, which were raised about selective application of the PBT in South Africa. In particular, the PBT structure in South Africa is regarded as against the principles of environmental justice as it places the burden on consumers, yet exempting manufactures with significant carbon footprints (McLellan 2014). Thus, South Africa should consider adopting the extended producer responsibility approach as it provides an incentive for producers to incorporate environmental considerations in the design of plastic shopping bags.

The study findings have important implications for policymakers intending to use PBT as a policy instrument. In order to set an optimum amount of PBT with a prohibitive effect, it is important to evaluate the elasticity of plastic bag demand. An understanding of elasticity of demand allows policymakers to set a PBT amount that has a restraining effect. In addition, PBT for manufacturers, retailers and consumers is recommended as it permits externalities related to SUPBs to be internalised at each stage of the value chain. In developing economies such as South Africa, there is also a need to move away from a regressive PBT as it disadvantages low-income earners.

Transparency on the utilisation of revenue generated from PBT is central to the acceptability of SUPBs tax. In this regard, South Africa’s Department of Environmental Affairs needs to play a key role in directing the PBT revenue to finance environment-enhancing projects. Another key lesson for policymakers is to refrain from evaluating the effectiveness of the tax during the initial stages of implementation as a reduction in plastic bag use may be a result of the level of environmental awareness that accompanies the tax or loss aversion perceived by consumers. Policymakers in developing countries should also consider implementing a direct tax as opposed to indirect consumer-level tax. This is because the latter has huge administrative costs that may put a strain on the collection of revenues.

As the use of PBT and alternatives of SUPBs proliferates, there is also a need by policymakers to guide against unintended consequences. For instance, there are growing perceptions that some retailers are ‘bagging’ the PBT. Another worrying trend is the emerging of unscrupulous predictory entrepreneurs who are keen to cash on the green shopping bag mantra. For example, in South Africa, manufacturers of reusable shopping bags are being accused of exaggerating the environmental benefits of such bags (Department of Environmental Affairs 2017). This study acknowledges that promoting a circular economy in which discarded plastic bags can be reused for energy generation is the sustainable option.