Bottle Bill Resource Guide

What is a Litter Tax?

Beverage companies offer up litter taxes as a "magic elixir" to all our litter problems.

Litter taxes generate funds to educate the public not to litter. They implement a bureaucracy to oversee litter education and sometimes provide funds for litter cleanup. Anti-litter education programs have been in place for years by such private sector groups as Keep America Beautiful—a PR tool of the beverage industry. Cleaning up litter is much like mopping up the floor while the spigot is running. Littering, however, continues unabated without a financial incentive not to litter. While deposit laws have been effective in reaching their goals of litter and waste reduction and energy and resource conservation, litter taxes have failed.

Compare a litter tax to a deposit law

Why not a Litter Tax?

• Litter taxes do not provide a disincentive to litter. Since they are passed on to consumers in the price of goods, citizens don't know they are paying or why.
• Most litter taxes are collected three times: once from the manufacturer, again from the wholesaler, and once from the retailer. The consumer actually bears the burden of three accumulated taxes.
• Litter taxes are poorly designed. They do not necessarily tax those responsible for the most litter, and often tax those who don't litter at all.
• Litter taxes waste government resources. Unlike deposit laws, they are costly to administer and require a government bureaucracy.
• Litter taxes are designed for a mere "mopping up of litter, rather than effectively "turning off the tap' of excessive waste.

Litter Tax Case Studies:
Current Laws

Hawaii

The litter tax here was implemented in 1979. Their program basically entails public funding of traditional litter education and receptacle programs.

Nebraska

Nebraska's litter tax was passed in 1979 and implemented in 1980. It provides for increased penalties for litterers, funds for litter education, research and litter receptacles, and grants for improving recycling facilities. No guidelines for spending in each of these areas is determined by the legislation. By taxing all manufacturers and wholesalers of certain items, about $700,000 a year is generated; a. pitifully small amount in light of the problem.

New Jersey

The state levies a tax on 15 categories of “litter-generating products” sold in New Jersey. The revenue from the tax funds litter clean-ups and municipal recycling programs.

Ohio

Ohio's litter tax is the country's most ambitions, generating $10 million per year since 1981. Despite these resources, there is no change in Ohio's litter problem. A $200,000 study commissioned by the Office of Litter Control concluded after 2 and a half years and $24 million, ".there is no significant difference in item count [of litter]." Commenting on the report, Robert A. Manning, Columbus beverage industry lobbyist said, "We have lived so long with the throwaway ethic, it will be a generation or so before results will be shown."

Tennessee

Tennessee citizens have been paying litter taxes on beer and soft drinks since 1981 (50 cents per barrel of beer and a percentage of the gross-receipts tax on soft drinks)—the industry-brokered result of TN's first effort to pass a bottle bill.

The taxes currently raise $5.1 million for the "county litter grants" program under TDOT's Beautification Office. Most of this funds litter pickup by county jail inmates (they get two days off their sentence for each day spent picking up litter).

The rest goes to litter education or to Keep Tennessee Beautiful. The 1981 legislation stipulates that if TN ever passes a bottle bill, the taxes will disappear. Ever since, Keep Tennessee Beautiful has helped defeat new bottle bills by telling anyone who asks that a bottle bill will mean the end of KTB as well as comprehensive litter control.

Virginia

Virginia is cited by deposit opponents as an excellent example of a successful litter tax program. But close examination reveals that these figures are based on surveys of just 1.8 miles of Virginia roadway. In fact, Mr. Stephen Runkle, who conducted the studysaid, "Had it been me, I would of moderated the claims. I don't think it was continued long enough to draw any definite conclusions." And in the annual report, "...this approach alone will, not provide -sufficient information to allow you to estimate and compare the total annual quantities of litter on our highway systems." And yet opponents of deposit laws continually extrapolate the figures from these very small sampling sites and claim a 66% reduction in litter for the entire state.

Washington

In 1970, a referendum was on the ballot for a Washington State deposit law. Just two months before election day, a beverage industry coalition placed on the ballot an "alternative" program-the litter tax. Although neither issue received a plurality of the vote, the legislature passed the "model litter control act" in 1971.

The taxing mechanism has been assailed as being terribly unfair. According to the Dept. of Revenue producers of meat, dairy, canned fruit and vegetables, bakery, sugar and confectionary products pay 11.7% of the tax, while beverage producers and wholesalers only account for 2.6% and the powerful paper industry only 1.9%.

Despite the outrageous nature of the taxing mechanism, the calculation of litter reduction has drawn the most controversy. Deposit opponents have claimed that litter was down as much as 66%, a figure subsequently refuted by the state government.

When the litter tax was implemented it became clear that no pre-law litter study had been done by which to gauge the effectiveness of the new law. To establish a baseline litter figure, Booz, Allen & Hamilton, an accounting firm, was contracted to estimate the amount of litter on Washington roads. Using litter generation figures from other states, they estimated Washington's annual litter generation at 100,000 tons.

A second year litter study by URS, a research firm contracted by Washington's Department of Ecology, determined that litter generation was 34,000 tons per year. Accepting the original baseline figure, the Department of Ecology declared that litter had been cut by 66%.

In 1975, a study by Daniel Syrek (and commissioned by Continental Can Co.) determined annual litter generation in California to be 40,000 tons/year. Compared with ' the baseline litter estimate, one would conclude that Washingtonians generated 2 1/2 times as much litter as Californians (who live in a state with 5 times the population). The baseline figure in Washington understandably came into question.

It wasn't until August 17. 1978 the Department of Ecology stated: ". . . the method used to arrive at this estimate is certainly not compatible with the quantification system now in use. As a result, this agency no longer uses the 1971 figures as a baseline because we do not feel we can defend them statistically with confidence."

Deposit opponents refuse to acknowledge this and continue to publicize the earlier erroneous figure. As in other recent publications, their 1982 ill-fated Total Litter Control Act pamphlet in New York states, "Washington State, which enacted similar legislation, reduced highway litter over a two year period by 66%."

Regardless of the claims of success, Washington still has a serious litter problem. In 1978 Governor Ray called litter along state highways "a disgrace. The worst I've ever seen it." Stated Laura Cambell, supervisor of a youth litter corps crew, "There are areas where within a week it looks like we haven't even picked up."

Litter Tax Case Studies: Repealed and Rejected Laws

National

In 1979, the Resource Conservation Committee, a cabinet level study panel consisting of representatives from the Office of Management and Budget, the Council of Economic Advisors, The Council of Environmental Quality, the EPA and the Departments of Energy, Commerce, Labor, Treasury, and the Interior, studied deposit legislation and the litter tax. After two years of research, the panel concluded that the litter tax, with its regressive, inflationary tendencies, its lack of incentive to either clean up or decrease generation of litter, and its total ineffectiveness toward resource conservation, was "not an effective substitute for a beverage container deposit system." The panel unanimously recommended against a litter tax.

Connecticut

Connecticut's litter tax was passed along with their deposit law in 1978, and both were scheduled for implementation simultaneously in 1980. In a ruling by the Connecticut Attorney General, collection of the tax was delayed until 1981. In their first action of the 1981 session, the legislature unanimously repealed the litter tax after a year's success with the deposit law.

Colorado

The Colorado litter tax went into effect in 1977 with a sunset clause that would have allowed the bill to lapse after two years if funding were not extended. Colorado's litter tax was so unpopular that there was an effort to repeal the law in the spring of 1979 - just 4 months before it would have died a natural death. Upon pressure from recyclers, funds for the ineffective litter programs were diverted to recycling grants in that session.

California

Deposit opponents often point to the success of California's litter abatement program. A closer look, however, reveals that their litter tax was a failure.

California's litter tax was to generate $18 million but was faced with fantastic opposition when attempts were made to collect them. Not only were manufacturers and retailers of such non-litter6d items as pianos and flowers taxed, but funds disbursed to municipalities were pitifully small. 19% of California cities received less than $10,000 while another 49% received under $5,000. In many cases, the money required by a municipality to apply for grants exceeded funds available.

The failure of California's litter tax was widely regarded as a waste of' government resources. According to the legislative analyst's office, the program was "inefficient and probably ineffective." Funding was reduced to zero in 1981, and the state repealed the law in 1982.

Kentucky

Kentucky's litter tax took effect in June of 1978. Claiming the tax was "unfair and arbitrary in its methods", meat wholesalers fought their case in court. Although they never ruled on the substance of the case, the tax was declared unconstitutional since it failed to receive a legislative majority required for a tax bill.

Vermont

Although the deposit law passed in 1972, opponents succeeded in delaying implementation for one year. The legislature then passed a litter tax -- deposit foes thinking it would be so popular that the deposit law would be repealed. The litter tax, however, was widely regarded as inefficient and regressive and it died the date the deposit law became effective.

Other Litter Programs

Deposit opponents point to many other litter programs that they, include under the expanded title of "litter and recycling laws." These programs are not funded through a special tax, but from general state funds, and administered by existing agencies. States included in this category are Alaska, whose program "prohibits littering" and provides funds for education and litter cleanup. New Jersey is included since their legislature chose to provide recycling grants. Louisiana provides for litter education and cleanup and South Carolina funds litter receptacles and prisoner pickup. Tennessee has raised their beer and soft drink taxes to provide for litter pickup by prisoners.

Some states have tried to implement "advanced disposal fees"—essentially another name for litter taxes.

Increasing the number of waste containers, picking up litter, and educating the public have done nothing to stern the tide of the throwaway ethic and its resulting problems of litter and waste.