California – Charge for Paper Carryout Bags is Not a Tax

2/26/2013

SALT Report 2188 – A California Appeals Court ruled that a county ordinance that bans stores from providing plastic bags to its customers and requires stores to charge $0.10 for each paper bag it provides to its customers is not a tax, it is a fee. This ruling is significant because any new tax must have voter approval under article XIII C of the California Constitution.

In their ruling, the Court noted that pursuant to the terms of Ordinance 2010-0059, any money received for the paper bags must be retained by the store and used for the following reasons:

  • To offset the costs of compliance with the ordinance,
  • To offset the costs of providing recyclable paper bags, or
  • To offset the costs of educational materials or other costs of promoting the use of reusable bags

Accordingly, the Court ruled that because the fee is required to be used for specified purposes, is not required to be remitted to the county, and does not provide any revenue for the county, it is not a tax and the voter approval requirements of article XIII C do not apply.

For Further Information

Court of Appeal of California Second District – Case Number B240592