Table of Contents INTRODUCTION 2 I. LITERATURE REVIEW 3 I.1 Externalities 3 I.2. Environmental tax 5 II. THE LEVY ON PLASTIC BAGS IN IRELAND 8 II.1. Summary 8 II.2.The nature of the levy 10 II.3. Implementation and enforcement 12 II.4. Results and impacts 12 III. LESSON FROM PLASTIC BAGS LEVY IN IRELAND 17 III.1. Ireland’s lessons 17 III.2. Plastic bags levy in Vietnam: 19 CONCLUSION 23 REFERENCES 24

INTRODUCTION
Now that people increasingly pay more attention to environmental issues, they are manifested in all areas of life. Air pollution? Do not worry. Already a car powered by electricity or eco-gasoline or even grass. Water pollution? Do not worry. Already advanced wastewater treatment technologies. So what if the pollution is caused by the consumption of plastic bags? Not easy to answer.
Let’s stand in the shoes of a public economist. The consumption of plastic bags brings a lot of benefits for everyone. If you are a manufacturer of plastic bags, you will get a lot of money as your profit. If you are a consumer of plastic bags, you will be satisfied with the benefits that they bring you. They are cheap, very light and of course, very easy to throw away after used. Now the problem has arisen. Have you ever wondered where plastic bags will be after discarded? We can say for sure that they do not disappear. They stay and pollute the environment. Environment Commissioner Janez Potocnik used to say: "The impact of this plastic waste can be seen littering our landscape, threatening our wildlife and accumulating as 'plastic soup' in the Pacific Ocean, which may cover more than 15,000,000 sq km," There will be a lot of people who do not use plastic bags but still have to suffer the consequences. Do you, consumers, have to compensate for them? Of course not. They are not your acquaintances, so you may think that it is ridiculous for a compensation to happen. As a result, the government has to control the game because this is a matter of social welfare.
The problem is that what the government must do to maximize the social welfare and delete deadweight loss in this case? There are many solutions and environmental tax is one of the most effective. Many countries have applied this method and Ireland with their PlasTax is the most typical example. They succeeded and have reduced plastic bag use rate down to 10%, a admirable number.
So what is PlasTax. What did Ireland do to have such a great success? Can Vietnam learn anything to improve effort in reducing the use of plastic bags in the country? We will try to explain it in detail in this assignment.
Due to lack of information, our database is only updated from 2002 to 2010. We would like to take this opportunity to thank Msc. Ly Hoang Phu for his enthusiastic help and instruction during the course. As mistakes are inevitable, your comments are highly appreciated.

I. LITERATURE REVIEW
I.1 Externalities
Externalities are common in virtually every area of economic activity. They are defined as third party (or spill-over) effects arising from the production and/or consumption of goods and services for which no appropriate compensation is paid.
Externalities can either be negative or positive, and they can also arise on the supply side (production externalities) or the demand side (consumption externalities). Therefore, we have four basic concepts of externalities which are positive production externalities, negative production externalities, positive consumption externalities and negative consumption externalities.
Firstly, positive production externalities occur when a firm’s production increases the well-being of others, but the firm is not compensated by those others. A very typical example is research and development activities because when a company engages in these activities, the discovery of new production technology can be adopted by other firms in the industry.
Secondly, negative production externalities happen when a firm’s production reduces the well-being of others who are not compensated by the firm. For instance, when firms engage in the production of goods in their manufacturing plants, hazardous gases may be released into the atmosphere, thus leaving the society having to bear the brunt of additional medical costs.
Thirdly, positive consumption externalities occur when an individual’s consumption increases the well-being of others, but that individual is not compensated by those others. Education is a perfect example as when society receives a better one, which in turn will benefit the country as a whole as more foreign direct investments will flow into the country, thus increasing employment and income.
Last but not least, negative consumption externalities happen when an individual’s consumption reduces the well-being of others who are not compensated by the individual. For instance, a person listens to stereo loudly at midnight and that listening has a negative effect on neighbor’s sleeps.
Despite the first three types of externalities, we chose the last one to dig deeper. Our paper will present a very typical case that is the consumption of plastic bags in Ireland which results the environmental degradation and reduces the well-being of other people living in society. Because the use of plastic bags brings more cost for the society as a result of externalities, Ireland government tries to reduce the consumption of this product by charging 15 euro cent environmental levy on every unit. In order to have better understanding of Ireland government’s policies, our paper will focus on this kind of externalities, analyze its effects and explain how is the solution is applied and the results of this solution.
The fact is that all governments and states have one common goal which is maximizing the social welfare in spite of issuing different policies to achieve. When the social welfare is not maximized, namely market failure. One of the main causes of market failure is externalities if the price mechanism does not take into account the full social costs and social benefits of production and consumption and negative consumption externalities are obviously not exception. The reason is that when there is a negative consumption externality, the marginal social benefit of consumption will be less than the marginal private benefit of consumption because of the existence of marginal damage (SMB < PMB). This leads to the good or service being over-consumed relative to the social optimum. Without government intervention the good or service will be under-priced and the negative externalities will not be taken into account. Again there will be a deadweight loss of economic welfare.

Firgure I.1: Negative externalities of consumption cigarettes
In the example shown in the chart above we illustrate the potentially negative effects of people consuming cigarettes on other consumers. The disutility (dis-satisfaction) created leads to a reduction in the overall social benefit of consumption. If the cigarette consumer only considers their own private costs and benefits, then there will be over-consumption of the product. Ideally, the socially efficient level of cigarette consumption will be lower (Q2), which leads to the loss of social welfare ( illustrated by the triangle). The issue is really which policies/strategies are most appropriate in reducing the total level of cigarette consumption.
It has been shown in many researches that the key to solve externalities problems is to internalise external costs and benefits to ensure that those who create the externalities include them when making decisions. However, it seems that unrealistic for any firm or individual to take into account all the benefit or the cost which they deliberately ignore or cannot fully recognize. Therefore, government intervention is necessary in order to achieve social optimum level. There are various means for government to intervene. If the externalities are small and in private sector, by applying Coase Theorem the government should assign property right clearly and completely so that the social efficient quantity will be achieved through bargaining between parties. When the large scale externalities happen in public sector, the Coase Theorem become ineffective and the government may intervene through the use of regulations and laws. For example, the Health and Safety at Work Act organization covers all public and private sector businesses in America. The British government introduced a ban on smoking in public places from July 1st 2007. Furthermore, the most popular intervention of government is using taxation such as Pigouvian tax and subsidies. In “The Economics of Welfare”, British economist Arthur Pigou suggested that governments tax polluters an amount equivalent to the cost of the harm to others. Such a tax would yield the market outcome that would have prevailed with adequate internalization of all costs by polluters. By the same logic, governments should subsidize those who generate positive externalities in the amount that others benefit. A type of tax based on Pigovian framework the government may use to correct the externalities and provide the efficient outcome of products which is considered as pollutants, namely environmental tax. This kind of tax we will discuss further in the next part.
I.2. Environmental tax
According to the OECD, an environmental tax is a tax whose tax base is a physical unit that has a proven specific negative impact on the environment. Four subsets of environmental taxes are distinguished: energy taxes, transport taxes, pollution taxes and resources taxes. Environmental taxes are a kind of economic instruments to address environmental problems. They are designed to internalize environmental costs and provide economic incentives for people and businesses to promote ecologically sustainable activities.
Examples of Environmental taxes include some of the following : * The Landfill Tax: this tax aims to encourage producers to produce less waste and to recover more value from waste, for example through recycling or composting and to use environmentally friendly methods of waste disposal. * The Congestion Charge: this is a high profile environmental charge introduced in February 2003. It is designed to cut traffic congestion in inner-London by charging motorists £8 per day to enter the central charging zone. * Plastic Bag Tax: this tax will be charge for a plastic bag which has been sold and passed directly to consumers at the point of sale. It provides a clearer and more consistent message than systems where retailers are responsible. We will analyze comprehensively the case of implementing plastic bag tax on Ireland next part to support our paper. * Vehicle excise duty (VED), also known as ‘road tax’: VED starts from a theoretical zero rate and accelerating up depending on the carbon emissions of the vehicle.
The idea coming up with environmental tax is that it will provide incentives to lessen environmental burden and preserve the environment by internalizing the environmental costs. The revenues generated by environmental taxes can be used for other environmental preservation projects, non-environmental welfare or to cut other taxes such as income tax, corporate tax and social insurance premium. For example, the money raised from a congestion charge on vehicles entering busy urban roads, might be allocated towards improving mass transport services; or the revenue from higher taxes on cigarettes might be used to fund better health care programmes.
In order to have a broader view of environmental taxes, some literature review of the empirical assessments of them should be referred. According to Pearson and Smith in their very well-known studies, energy/carbon tax is a combination of a tax on the carbon content of fossil fuels and a tax on all- nonrenewable form of energy. The rationale underlying this form of tax is that introducing a financial cost on carbon emissions creates an economic incentive to reduce carbon intensity in production processes and stimulates a shift to in production to less carbon intensive technologies.
It is argued that environmental taxes, like pollution taxes increase cost of affected industries and reduce their economic performance. Moreover, the loss of international competitiveness results a decline in net exports, and in the extreme case, the relocation of industries, which introduce a negative impact on GDP and employment. If pollution taxes are raised in one country, producers may shift production to countries with lower taxes. This will not reduce global pollution, and may create problems such as structural unemployment and a loss of international competitiveness. On the other hand, the tax revenue generated by the environmental tax allows a reduction on other distortionary taxes in the economy, which could have a positive impact on GDP and employment. This is named the double dividend theory.
Furthermore, a large amount of researches has been conducted to evaluate the impact of environmental taxes on income distribution. Taxes on some de-merit goods (for example cigarettes) may have a regressive effect on low-income consumers and lead to greater inequalities in the distribution of income. It should be possible for authorities to develop “smart tariffs or taxes” where account is taken of the impact of pollution taxes on vulnerable households such as low low-income consumers. Among the earliest works is one by Poterba (1991), who analyses the distributional effect of gasoline tax in the US. Using the data from the US Consumer’s Expenditure Survey, Poterba (1991) calculates the fractions of household income and expenditure that are devoted to gasoline purchase. He finds that the tax is only slightly regressive, especially when expressed as a share of expenditure.
On the other hand, Safirova et al. (2004) find that the burden of congestion falls disproportionally on the rich (in and around Washington, DC), so that road pricing or fuel taxation would be strongly regressive.
With a view to the project of a European carbon tax, Pearson and Smith (1991) estimate the distributional impact of the tax in seven European countries, namely France, Germany, Italy, Netherlands, Spain, the UK and Ireland. Augmenting Poterba’s approach by including price elasticities (although they do notestimate any demand system), they find that in the first five countries the tax would be weakly regressive, whereas it would be significantly regressive in the UK and strongly regressive in Ireland.
A study for Canada was conducted by Hamilton and Cameron (1994), who use an input-output model of the economy to translate the carbon tax into all consumer prices and then apply Statistics Canada’s micro-simulation model to assess the distributional impact of the price increases.The simulated tax turns out to be moderately regressive.
With listed above effects, the environmental taxes is still be applied in many countries in the world because social welfare benefit from it. In particular, the social deadweight loss will drop or may be eliminated.

Firgure I.2: Social efficient level achieved by environmental tax.
As illustrated as the graph, environment taxes operate as a Pigouvian tax and are charged equal marginal damages. The marginal social cost lies above the marginal private cost because marginal social cost equals marginal private cost plus environmental taxes (in this case MD = tax). Before tax, the quantity produced is Q1, the price is P1 and the triangle in pink represents for the social deadweight loss. After tax, the quantity a firm produce to maximize their profit will reduce to the social efficient quantity Q2 and the price becomes higher at P2. The deadweight loss will fall (in this case equal to zero). The square in yellow represents tax revenue.
According to Pigouvian’s framework, the environmental taxes should be equal to marginal damages and be levied directly on the sources of pollutants. In reality, as a result of many other effects of environmental taxes as we mentioned above, the environmental taxes may be charged either less than the marginal damages to avoid its impact on low-income people or more than the marginal damages many times in order to change consumer’s behavior, for instance the levy on plastic bag in Ireland. The latter case will be analyzed fully in next part of our paper.
II. THE LEVY ON PLASTIC BAGS IN IRELAND
II.1. Summary
The pre-levy consumption of plastic bag in Ireland
The fact is that before the implementation of the levy, plastic bags constituted a small proportion of total waste generated by Irish household each year (by weight) and plastic bags were not the most numerous item of the national litter composition (constituting some 5% of the share, The Litter Monitoring Body, 2003). Given this, it might seem strange that such focus was placed upon plastic bags by policymakers. However, the main motivating factor for addressing plastic bag consumption and ultimately litter was their visibility. The long life characteristics of these bags, combined with the landscape and climate of Ireland, ensured that plastic bag litter was the most visible and persistent component of litter pollution throughout the countryside and along coastlines. Therefore Irish government decided to implement levy on plastic bags.
In 1998, a consultancy study was commissioned to identify and assess possible fiscal, regulatory or other measures that might be undertaken to minimize the use and environmental impact of plastic bags.
Published in January 1999, the study found that 1.26 billion plastic bags were dispensed free of charge at retailed outlets per year, which represented 328 per inhabitant per year. Sources of plastic bags were: domestic producer accounting for 20%, imported making up 80%, particularly 55% from EU, 25% from Third Countries. Home producers create about 200 jobs for employment. The survey showed that 82% of plastic bags were consumed in the grocery sector. The consultants recommended minimum 4 cent levy to be effective. However, consultants did not recommend whether “supply side” or “point of sale” levy would be most effective.
A public consultation process which is undertaken late 1999 showed a very strong public support for the levy and principle opposition from plastic industry, packaging importers/ distributors, and sections of retail sector.
Based on these results, initial preference was for a supply-side levy that was considered the simplest and more cost-efficient option. However, difficulties were subsequently encountered with relevant stakeholders regarding the implementation and enforcement mechanisms of supply-side levy. Further reflection regarding the levy amount considered that 15 cent would be more effective.
Government approval was obtained March 2001 for point of sale levy to be applied on customers by retailer (about 30,000) and special Environment Fund established. Producers / importers / distributors opposed, while retailers were supportive although there were worries about customer refusal to pay, and customers were supportive with some concerns regarding effects on the low-incomes.
Introduction to the levy
The Irish plastic bag levy was introduced in March 2002 under the Waste Management (Environmental Levy) (plastic bag) Regulations 2001. Initially, the tax was set at € 0.15 per plastic bag, with exemptions for smaller plastic bags that met specific conditions and used to store non-packaged goods such as dairy products, fruit and vegetable, nuts, confectionary, hot or cold cooked food and ice – these are known as levy-free bags (reusable plastic bags are also exempt as long as the charge for the bag exceeds € 0.70). In July 2007, this tax was increased to €0.22 for each plastic bag (Statutory Instrument No. 605/2001, 2001).
The policy was conceived to emphasis on anti-litters. In addition to the existing littering ban ( The Litter Pollution Act of 1997, as amended by the Waste Management (amendment) Act 2001), such levy targets to change the consumer behavior toward more sustainable mode of consumption, particularly to reduce the consumption of disposable plastic bags and to reduce visual litter in the Republic of Ireland.
All retail store in the country must charge the tax for each plastic shopping bag. Reusable plastic bags can be sold to customers for an amount of not less than €0.7 and the Revenue Commissioners is the body authorized to collect the tax, which is remitted to an Environment Fund. This fund may be used to cover the costs of administration of the levy and to support and promote variety of environmental programs.

Figure II.1: The levy system
II.2.The nature of the levy
The plastic bag levy is assessed against per plastic bag the consumers use. This levy is one kind of environmental taxation, and to some extent similar to Pigou tax (1960). Such taxes are intended to internalize the external costs of pollution through imposing a levy on the pollutant at a price level which reduces emissions to the point where the marginal benefits of internalization just equal the marginal abatement costs of abatement. The levy is designed without consideration of “double – dividend” effects and introduction of competitiveness concern (Frank Convery et al. 2007). However, this levy is not Pigou tax because no marginal external costs identified and no optimal level of tax found. It typically aims at changing consumer’s behavior, and fixed ay an amount sufficiently high to give most consumer pause to thought, and stimulate them to avoid paying by bring their own “permanent” reusable shopping bags with them. The initial operational levy, set at €0.15 per bag, was well above what was the expected maximum willingness to pay for bags. As shown in the table 1, (Dury et al. 2000) the estimated an average maximum willingness to pay approximately one sixth of the eventual levy level.

Figure II.2: Maximum willingness to pay for a plastic bag
The mechanism to this levy can be understood under the mechanism of fixing market failure regarding to negative externality in consumption. Implementing the levy (like a cost as MD), shift the MPB curve to the left, leading to a decline in quantity of plastic bags consumed to the optimal point (Qopt) (although in reality, to our somehow limited access, there are not any studies or publications indicating what is the expected optimal point of the Government of Ireland).

Figure II.3: Negative externalities in consumption
II.3. Implementation and enforcement
The consideration of an Irish plastic bag was discussed initially in 1994 and until 1999, the study consultancy by Mr. Noel Dempsey was conducted recommended the upstream levy (on producers and importers) of approximately € 0.035 per bag, if such a levy had been applied, then we would have a Pigou tax. However, it’s Mr. Dempsey that then wanted a strong signal to be given directly to consumers, including having the choice of paying levy and getting a bag. In March 2000, a down-stream €0.15 tax per bad was passed by the Irish Government. Primary and secondary legislation complemented prior to its commencements by service level agreement with Revenue Commissioners and extensive multi-media public information campaign (6 weeks towards general public and retailers).
Revenues from tax are paid into Environmental Fund which is administered by the Department of Environment, Community and Local Government. The fund is used to cover administrative costs (3% of total revenues) and support a wide range of environmental programs. The costs of implementation are reported to be very low because bookkeeping and reporting has been integrated with VAT returns.
II.4. Results and impacts
Since the introduction of the levy to end 2010, a total of €166m were collected (landfill levy generated an additional €274m) – all for environmental purposes. The proceeds are used for waste recycling infrastructure (capital and operational costs), stepped-up enforcement, intensive waste awareness campaigns, anti-litter initiatives, environmental research etc.
As shown in the figure, the revenue from sale of plastic bags increased steadily from €10.4million to €26.6 million. It declined to €23.4 million in 2009 and to 17.4 million in 2010 (Environmental fund, 2002 – 2010). The decrease in revenue of the Environment Fund took place one year and a half after the increase of the tax to €0.22 per plastic bag. It also coincides with the financial crisis. A hypothesis is that due to financial crisis, people shopped less, and thus used less plastic bags. The increase of the tax could not have had any effect on consumer behavior. However, the Plastic bag levy receipt declining from a maximum of 26.7 m in 2008 to 17.3m in 2010; which is an indicator of success, because the levy revenue comes from the consumption of plastic bags.
The levy had an immediate effect on consumer behavior with a decrease in plastic bag usage, a trend which reserved slightly over the years, but which was countered by the increase in the plastic bag level in 2007. Bag consumption reduced by some 90% on pre-levy levels.
Pre levy consumption – 328 bags/habitant/year
Post levy consumption – 21 bags/habitant/year
Pre levy increase 2007 – 32 bags/habitant/year
Post levy increase 2007 – 26 bags/inhabitant/year
Usage in 2010 – 18 bags/habitant/year

Figure II.4: Plastic bags levy revenue 2002- 2010
Indicators of Environmental performance:
The main motivating factor for the introduction of the levy was to reduce the consumption of plastic bags and ultimate their impact on litter and litter visibility. The most recent survey date available for 2010 shows that plastic bags constitute 0.25% of litter pollution nationally compared to an estimated 5% prior to the introduction of the tax. The results in Figure below illustrate the percentage of shopping bags as a percentage of the National litter composition since 2002, as found in their reports. (The National Litter Pollution Monitoring System. 2000- 2010).
According to Convery et al. (2007), a number of litter surveys or urban areas were conducted by the consortium of Irish Business Against Litter (IBAL) and an Taisce (The National Trust of Ireland). These surveys indicated that between January 2002 and April 2003 the number of “clear” areas (i.e areas in which there is no evidence of of plastic bag litter) has increased by 21%, while the number of areas without “traces” (i.e. five items over a linear of distance of 1metre) has increased by 56%.

Figure II.5: Plastic Bags as a Percentage of Ireland’s National Litter Composition.

Figure II.6: Percentage of Surveyed area clear of Plastic Bags Litter
The levy applies only to single-use plastic bags and as a result it has been suggested that since the introduction of the levy paper shopping bags are more prevalent (though it was not possible to find data on consumption paper bags before and after the introduction of the tax, although it’s expected that usage has increased). Surveys by Department of the Environment, Community and Local Government in 2007 have indicated, however, that up to 90% of shoppers used long-life bags in 2003, compared with 36% in 1999, which suggests that the switch to paper bags has been far from universal switch, and that there has been a discernible switch to long-life bags.
Impact on main stakeholders
Retail industry and customers
An evaluation of the impact of the levy on householders and retail sector was undertaken by Convery et al. The authors interview seven leaders in the retail sector and conducted random telephone interviews with consumers, the results were as follows:
Retailers found the effects of the tax on their well-being neutral or positive, closely related to the fact that the additional costs of implementation were generally less than the savings resulting from not having to purchase plastic bags. Implementation costs were low because book-keeping was integrated with VAT returns; and
Overall, consumers were very much in favor of the levy. While the levy had caused them some expenses, through either paying the levy or buying long-life bags, virtually all respondents responded that they felt impact on the environment was positive, producing a noticeable reduction in plastic bags “in the environment”
A very interesting results were found through an interview with John Curran, Head of Sustainability at the Musgrave Group. Musgrave operates 750 stores in the Republic of Ireland and also has store in Great Britain. In 2007, the Musgrave Group’s sales amounted to €3.5 and €2.5 billion in Ireland and Great Britain respectively. In Great Britain, there is no regulation aiming to reduce the usage of plastic shopping bags, so a comparison can be made.
In Ireland, the stores issued 40 million plastic bags, whereas in Great Britain, the stores issued 513 million plastic bags. This corresponds to 1 bag for 87.5 euros of sales in Ireland and 1 bag per 4.87 euros of sales in Great Britain; conversely, 1.14 bags per 100 euro sales in 20 bags per 100 euros of sale in Great Britain (see figure). In similar environments, the Musgrave Group had to issue approximately 20 times more plastic bags per unit of sale in Great Britain, where is no tax on plastic bags. This result proves the policy was extremely successful in changing consumer behavior in the Republic of Ireland (Curran, 2012).
The introduction and purpose of the policy were welcomed by both retailers and consumers, which facilitated rapid behavior change. The pre-levy concerns relating to the possibility of declined sales because of the shoppers’ changing to go to stores in North Ireland in order to avoid paying tax was worn out. Surprisely, most consumers brought their own bags to the stores and there were no impact on sales whatsoever countrywide, due to the environmental levy on plastic bags (Curran, 2012)

Figure 7: Plastic Bags per 100 euro sales

Plastic bag industry
Finally, Fehily et al. (1999) analyzed the impact of the tax on the plastic bag industry. They estimated that in 1999, 79% of the plastic bags consumed were imported. The remaining 11% was produced by four plastic manufacturing firms operating in the Republic. Since then, one has gone out of business causing the loss of 26 jobs, but it is uncertain whether this would have happened even in the absence of the levy.
III. LESSON FROM PLASTIC BAGS LEVY IN IRELAND
III.1. Ireland’s lessons
Establishing plastic bags levy in 2002, Ireland became the first country to use a nation-wide levy to decrease the number of plastic bags used. In addition to that, up to now, according to Jennie Romer, the founder of plasticbaglaws.org, this levy of the country “is still widely regarded as the most successful charge on plastic bags, in part because the amount of the levy is relatively high and is adjusted based on per capita plastic bag usage."
The question raised here is that what have created such huge notable success for Ireland? As identified by the Irish Government, there are some factors as followed.
Firstly, having a clear and effective campaign prior to the imposition of the tax is important to make people understand the rationale behind PlasTax and how it would operate. Securing support from the Minister for Finance, the Revenue Commissioners and the local authorities as well as extensive consultation with stakeholders were crucial to the successful implementation of the levy. A compromise that all the tax collected shall be assigned to an Environment Fund, for a variety of purposes was made. For example, the money can be used for research and development programs which support the prevention or reduction of waste; the production, distribution or sale of products that are environmental-friendly or to increase environmental awareness among citizens. In an interview with ABC channel in Australia, the Irish Ambassador Declan Kelly has stated that: “Consumers went to extraordinary lengths to avoid paying the 15 cent levy, and reports of people carrying bundles of groceries in their arms were common place. Retailers, who were skeptical of the levy, and the additional work involved in administering it, were soon won over when they saw the money they saved on disposable bags - and the margin they made on selling bags for life!”.
Secondly, even if people now all agree that plastic bags shouldn’t be used, they must be given something to replace because if not, what would they use to carry their goods? Hands? That is not a good answer for no one wants to hang around with a fish in their hands. That’s why available substitutes are definitely important. There are many options for consumers: paper bags, cotton bags or reusable bags. As paper and cotton bags if not reused still cause pollution, reusable bags are most preferred. An average reusable bag has the lifespan of over seven hundred disposable plastic bags and over a lifetime, the use of reusable bags by just one person would save over 22,000 plastic bags. As reusable bags, sometimes called bags for life, come in all sorts of smart and stylish shapes and prints, they are becoming more popular. In Ireland, most supermarkets have replaced plastic bags with reusable bags. SuperQuinn, one of the major supermarkets in Ireland, have sold 1.4 million units of their signature ‘green bag’, and Tesco, also a major, estimated that over the first year reusable bags sales had been approximately 1/3 of their previous number of free plastic bags.
Thirdly, despite the positive attitude towards PlasTax of Irish, enforcement and administration are undeniably significant. An enforcement network of local authority officers was established at the time the tax was imposed to monitor and co-ordinate the enforcement drive. Retailers who fail to implement the Levy Regulations correctly are liable on summary conviction to a fine not exceeding €1,905 or to imprisonment for up to 12 months, or both or, on conviction on indictment, to a maximum fine of €12.7million, or to imprisonment for up to 10 years, or both. In addition to that, a system of daily fines shall apply where an offence continues to be committed after conviction.
Fourthly, the tax should be passed directly to consumers. Why didn’t Irish government decide that consumers were the ones to pay tax but not retailers or producers? It has been proved that imposing a tax on producers would reduce the financial incentive for consumers to change their behaviors and hide the tax from public view. For instance, in South Africa, the retailers are obliged to pay the tax and can’t pass on the full costs to the consumers. The steady increase in the demand for plastic bags in South Africa recently is evidence that the policy has failed partially. The South African levy has only succeeded in reducing consumption in the short term.
Fifthly, the levy itself should be simple as much as possible, which means it is easy for the tax payers to follow.
Sixthly, some compliance with a plastic bag manufacturing industry is also necessary. As plastic bag manufacture is just a minor industry in Ireland and there were only four small company producing plastic bags at that time, it was not a big deal for the country to impose a heavy tax. Note that only after the tax was imposed, only one company had to go out of business. A strong industry without so much involvement in the policy development process may have prevented the implementation of the levy in Scotland.
Last but not least, there must be a flexibility in setting a certain level of levy. Johane Dikgang, Anthony Leiman and Martine Visser suggested in their report “Analysis of the Plasic Bag Levy in South Africa” (2010) that a too low levy could only bring success in the short term in reducing plastic-bag demand and the levy should be set high enough to achieve sustained reduction in the consumption of plastic bags. However is high always the ideal solution? The answer is no. Indeed, policy makers should pay attention to inflation rate and consumer spending, especially in the period of economic uncertainty when determining the amount of tax. According to apenvecon.com in their article “Regulatory Impact Analysis on Proposed Legislation to Increase Levies on Plastic Shopping Bags and Certain Waste Facilities” (2008), the tax should be increased with inflation (measured by Consumer Index) yearly, and on top of this there should be the option to raise the levy up to 10% of the base level for that year.
III.2. Plastic bags levy in Vietnam:
Plastic bags levy:
Like many countries around the world, Vietnam has a rather high rate of using plastic bags. As estimated by the Ministry of Natural Resources and Environment, averagely a Vietnamese family throws away at least one plastic bag per day, which means in only one day, about 25 million bags are dismantled. Encouraged by the acts of countries succeeding in lowering the number of plastic bags used like Ireland, Germany, Denmark, South Africa (short-term), Bangladesh, or China, Vietnam step by step has been trying to find a suitable way to solve the problem of plastic bags. It is to impose tax.
Although a levy on plastic bags was established in early 2012, it had been mentioned several times before. In August, 2008, at the conference of “Proposing Solutions to Reduce the Use of Plastic Bags in Ho Chi Minh City”, the Recycling Fund under the Ho Chi Minh City Department of Natural Resources and Environment proposed the idea of imposing tax on plastic bags. Accordingly, the tax would be added to the price of the bag and the consumer was charged upon purchase. The tax would be charged for each type of bags. For example, disposable foam containers would be subject to a higher tax rate than thick plastic bags; food packaging bags (used for dairy products, fruits, meat, fish, etc.) were exempt from tax. On January, 1st, 2012, the environmental protection law officially came into force. The law is imposed on eight categories of products which are considered to have big impacts on the environment, including petroleum products, coal, HCFC solutions, plastic bags, herbicide, pesticide act, forest products preservatives, warehouse antiseptics listed as the products for “limited use”. Accordingly, plastic bags which are subject to tax are bags made of HDPE (high density polyethylene resin), LDPE (Low density polyethylene) or LLDPE (linear low density polyethylene resin). Exception are plastic bags for pre-packaged goods and plastic bags conforming with the criteria for environment-friendliness upon receipt of the certificate of environment-friendly plastic bags from an authority in accordance with the Ministry of Natural Resources and Environment.

The levy for plastic bags varies from 30.000 VND to 40.000 VND/kg depending on the types and can reach a peak of 45.000 VND if the draft Resolution of the Standing Committee of the National Assembly is passed, making plastic bags the one to bear the highest tax among goods listed in the environmental law.

Disadvantages:
Unlike the situation of Ireland, plastic bags levy in Vietnam has a bunch of problems even before it was established.
Firstly, Vietnam didn’t have any large campaign to help its citizens recognize the rationale of the levy and accept it. Although almost everyone knows the impact of plastic bags on the environment, only 4% of Vietnamese consumers agree to pay at a higher price . Why? Because plastic bags are too familiar and useful for Vietnamese. More important, people don’t want to pay as there is no clear explanation where the tax revenue may go. It cannot be denied that corruption is not a new problem, not to say eternal, in our country.
Secondly, enforcement and administration are too poor. About the tax collection, a corporate will implement, compute the amount and pay the tax on their own. The tax authorities are only responsible for propagation, support, inspection and testing. According to Mr. Nguyen Van Kha, General Director of Tien Hung commercial joint stock company, the circular guiding of the Decree on the Law on environmental protection is not complete, specific and accurate. This leads to the local tax authorities’ different understanding of raw materials, names and specifications as well as their thorough tax collection, resulting in the status of “collect first, talk later”. Therefore, it can be clearly seen that the mechanism of tax management in Vietnam is too loose, fogy and does not provide much help as in Ireland.
Thirdly, the levy itself is not clear enough and causes a lot of confusion among enterprises. According to the Environmental Protection Law, plastic bags which are not environment- friendly are taxed 30.000- 40.000 VND/kg depending on the types of bags. However, there are no criteria specified to determine which plastic bags should be environment-friendly and which plastic bags should be taxed at which level: 30.000 or 40.000 VND, making some enterprises producing plastic bags not know whether their products are subject to the levy or not, and if they are, how much they will have to pay.
Fouthly, if Ireland only has four enterprises producing plastic bags, there are hundreds of large, medium and small enterprises as well as households producing those bags. As a result, imposing such levy can be considered as a critical hit to them.
Finally, almost all enterprises have claimed that the levy of 40.000VND is too high for them. As an enterprise only gets 30.000VND for each kg produced, so a levy of 40.000VND/kg will create a relatively significant loss for them.

Advantages:
Although there are several problems about the levy on plastic bags in Vietnam, it will be unfair to say that it is impossible to improve it and reduce the use of plastic bags. Why?
Firstly, averagely if each kg of plastic bags is taxed 30.000 VND then each year Vietnam will collect at least 360 billion VND, just from plastic bag taxation, out of 570 billion VND from environmental tax.
Secondly, there are a number of substitutes for plastic bags. At present in Ho Chi Minh city, there are 4-5 packaging manufacturers who have the technology to produce biodegradable plastic bags. Consumption of this type of bags only accounts for about 10% of the use of plastic bags in general, which is a modest figure. Therefore, even if everyone gives up using plastic bags and switches to biodegradable plastic one, those manufacturers can still respond promptly. It will be unlikely that there are no goods in stock.
Thirdly, nowadays in Vietnam, there are several non-profit organizations and clubs working non-stop to help reduce plastic bags, such as 350.org. Moreover, large supermarkets have also played a role in the effort to reduce those bags. In 2007, the Metro supermarket system initiated a campaign called "Metro with consumers to protect the environment, which is still carried on up to now, in order to limit the amount of plastic bag waste into the environment, which has turned out to be a huge success despite initial negative reactions from consumers. On implementing this program, Metro sold to consumers bags made from synthetic fibers that can be used many times instead of thin plastic bags for free. An Phu supermarket (District 2, Ho Chi Minh City) also has a policy not to give their consumers free plastic bags but available old cartons so that they can bring their goods home if they forget to bring their own shopping bags.

CONCLUSION
In 2002, Ireland established a levy of €0.15 per plastic bag. The effect created was dramatic and made Ireland the ideal model for other countries in the campaign of reducing the use of plastic bags. Ever since, Ireland with its PlasTax has successfully decreased the usage by more than 90%, which is a record that has never been broken up to now.
There are several reasons for their success but the key factors are their smart campaign to win Irish people’s acceptance, strong enforcement and implementation, available substitutes for plastic bags or flexibility in setting a suitable levy, etc.
Although Vietnam has been working so hard in the effort to reduce the number of plastic bags used, there are still many things to do. Learning from the success of Ireland as well as the failure of some other countries, Vietnamese policy makers should be more careful in handling the levy. There has to be an effective campaign to help Vietnamese people understand the importance of the levy and how the tax revenue will be invested. As Vietnamese people are so used to plastic bags, it’s not easy to let them change immediately. This will take time but it is not impossible. Therefore, the Government had better be patient in raising people’s awareness. Moreover, the tax management system must be reinstructed to be more helpful and flexible and the definition of plastic bags to be taxed must be simple but clear so as not to cause confusion in implementation. Finally, the levy is supposed to be reasonable, not too low but not too high, so that the use of plastic bags will decrease but enterprises still survive and develop.
In conclusion, environmental tax, particularly levy on plastic bags, has played a fascinatingly important role in both improving the quality of the environment as well as raising social welfare, ensuring that everybody can enjoy a better life, or at least a life as good as others.

REFERENCES
Australian department of the Environment and Heritage, “Plastic shopping bags: Analysis of Levies and Environmental Impacts” (2012)
Dirk Heine, John Norregaard, and Ian W.H. Parry, Environmental Tax Reform: Principles from Theory and Practice to Date (2012)
Documents presented at Brussels Environment conference on economic instruments in support waste prevention, Levy on Plastic bags in Ireland, 2011
Frank Convery, Simon McDonnell, Susana Ferreira, The most popular tax in Europe? Lessons from the Irish plastic bags levy, 2007
Johane Dikgang, Anthony Leiman and Martine Visser, “Analysis of Plastic Bag Levy in South Africa” (2010)
Mark Pearson and Stephen Smith, The European carbon tax: an assessment of European commission’s proposal, 1991
Rachel Marie Miller, “Plastic Shopping Bags:An Analysis of Policy Instruments for Plastic Bag Reduction” (2012)
Regulatory Impact Analysis on Proposed Legislation to Increase Levies on Plastic Shopping Bags and Certain Waste Facilities (2008)
The Irish Plastic Bag Levy – A review of its performance 5 years on, 2007
350.org
apenvecon.com, business.gov.vn tapchithue.com.vn tuoitre.vn www.jacses.org/en/paco/envtax.htm
www.tutor2u.net/.../environmental_taxation.htm