Would bag charge be fee or tax? Depends on which side you're on

So which is it: fee or tax?

The city of Seattle and others who want to curtail the use of throwaway grocery bags call the proposed 20-cent charge on disposable plastic and paper bags a fee.

The American Chemistry Council — the prime force behind the Coalition to Stop the Seattle Bag Tax — repeatedly refers to it as, well, a tax.

While what it's called would have no practical impact in the end — 20 cents is 20 cents — the label does spark a predictable reaction among some voters, especially in this economy.

"I am a senior living in Ballard on a fixed income, ... " Seattle's Ken Bertrand wrote after reading a recent Seattle Times story about the issue. "I oppose this proposed tax (and it is a tax, not a fee) ... ."

Said mayoral candidate Jan Drago, who opposes the charge: "Actually, it's a fee, but I think it's been more generally referred to as a tax. I think that's what people think it is."

On Aug. 18, voters will be asked to decide on Referendum 1, which would require supermarkets, drugstores and convenience stores to charge shoppers 20 cents for each disposable plastic and paper bag they carry out.

Stores with annual revenues less than $1 million would keep the 20 cents to cover their costs, while those grossing more than that would keep 25 percent and pass the rest to the city.

The city would use its share to fund efforts toward recycling, environmental education and reusable bags for low-income consumers.

The City Council last year passed the 20-cent charge — which it called a fee — but the anti-you-know-what group, funded to the tune of $1.4 million thus far, collected enough signatures to put the issue to voters.

Whether the charge is a fee or a tax depends on where the money goes, according to John Ridge, an attorney specializing in tax controversy for Seattle firm Stoel Rives. The more specific its target, he said, the less likely the chance that it's a tax.

For example, funds exacted from a toll on the Highway 520 bridge for a general transportation budget would be a tax more than a fee, he said.

"A tax is something where I take money from Mr. Smith, not to benefit Mr. Smith or Mr. Smith's kids but the entire city of Seattle," Ridge said. "If I'm targeting a particular neighborhood, for instance, it's a fee."

That the 20-cent charge would go for specific environmental uses is the key distinction for Ridge. "That in my mind starts me thinking it's not a tax," he said.

Adam Parmer of the anti-bag-charge coalition thinks otherwise but declined to argue the point.

"When it comes down to it, Seattle residents aren't going to care which it is," he said. "Just that it costs."

The coalition's campaign mailings and radio ads are less political, freely using the T-word. The word "tax" appears at least 15 times on its mailed flier and is heard 10 times in the radio spot.

"Every sentence, they use the word tax," said Heather Trim of People for Puget Sound, which supports the 20-cent charge. She calls it a fee. "They know it rings a bell with some of the voters."

Seattle City Council President Richard Conlin acknowledged the term "tax" is an emotional word for people.

The measure purposely was constructed to fit the definition of a fee, he said, based on a series of court definitions that he thinks are defensible, should it come to that.

"We can't use it for anything else," Conlin said of the money that would go to the city. "It has to go right back into the Solid Waste Fund ...

"We feel real solidly grounded," he said. "But you never can tell when you get into court."