But before I get to that, some preliminary details that are not at all clear this this observer:
Exactly what category of store does this apply? And, why not all if there is some distinction?
Why the same fee for both paper and plastic bags?
To whom do these fees accrue?
What is the estimate of the cost of the bags to society?
These details are pretty important because if you are to make an economic argument for such a fee, it would be along the lines of Pigouvian taxes. Which is to say that if an economic activity yields a cost on others not directly involved in the transaction, taxing that activity the amount of this external cost will create an efficient market outcome. So I would like to know to start, what is the cost of these bags to society? Yes their manufacture is expensive, but that cost is born by the stores. So I imagine that it is a combination of the carbon emissions from the manufacturing process, the cost of improperly disposed of bags on the municipality and, what else, the cost of the pollution in terms of despoiling habitat? I don't really know all of the bad things that bags are supposed to have done to society so feel free to fill me in. If these are serious and the fee is commensurate with these costs, then as an economist I have no problem with an appropriate tax.
But as an aside, I often reuse my bags (I have a dog - I need say no more) and extras I bring back to the store to recycle - does this really help, or does the energy that is used in the recycling process mostly wipe out the gains?
However, this fee is not being talked about in these terms, but more in terms of "how much would it take to really get people to opt out of getting bags with their purchase?" Which, as an economist with a bit of a libertarian streak, I find irritating. Government has no business deciding how we should behave above an beyond these social costs. Also, as I mentioned above, there should be no distinction between grocery stores and any other store if we are being honest and consistent. A bag is a bag - let the patrons of all stores pay the true social cost! (Let me venture to guess that more patrons of Victoria's Secret than of the Disney Store would opt to pay for the bag - but that is another economics lecture).
So I think this talk of twenty cents is absurd. This seems much too high for the Pigouvian tax - but I am ready to be shown otherwise. Also, if we are serious about the 'right' tax, then paper and plastic should be different costs presumably. So this really is about behavior not true social costs and, as such, a dangerous and very tricky path to tread for a mayor - social engineering. There are lots of things we wish people would do - be nice to each other for example - but are we going to start charging for rudeness?
Let me be absolutely clear. These bags may be a serious problem (though I think we are really talking about the plastic ones not paper - though paper has its own issues) and as such, may be an entirely appropriate case for a fee, but before suggesting a random fee, be serious in thinking about the external costs and sell the fee as good economics. I think it would be great if everyone used reusable bags, rode bikes everywhere and such, but there are many, many things that are in some way bad for us and the environment (e.g. beer) that once you start with the logic that government should start telling us what we should do, it is hard to stop. This is really my point about must policy, there should be good economics behind it, not just good intentions.
A final side note, the accrual of these fees would presumably go to the municipality to offset the extra cost they impose, otherwise it would seem a bit pointless but so far I have failed to notice how this tax would be implemented.