First of all, it's not a tax. The City doesn't collect a cent from it. The more proper term to use would be "user fee".
Whatever, semantics.
Secondly, the amount of money that is actually collected from it is so minimal that it doesn't make sense for the City to dedicate the manpower and resources to collecting it for revenue purposes. It would also be an enormous pain in the ass for retailers to keep tabs of how many bags they've sold. Some stores may sell 10 bags, or less, a day. It doesn't make sense for a merchant to fill out paperwork and for some drone at city hall to be hired to audit what might amount to 50 cents worth of daily claims.
At the end of a day or week the merchant counts the contents of the container, divides by 5 and has the number of bags sold, pretty simple.
Finally, I think it's only fair that retailers - and not the City - get to keep the revenue from plastic bags. I did a quick check on Ali Baba and a Chinese manufacturer sells 20,000 plastic bags at 5 cents (US) per bag.
The same manufacturer offers a larger than usual bag for less than $0.01 each, I'll bet the big stores do MUCH better than that.
in other words, the bag fee barely makes up for the cost that merchants have to shell out when they buy plastic bags. This is hardly a "1000% markup" (did you really think it cost 0.5 cents to manufacture and distribute a plastic bag? If that were the case, you could buy 10,000 bags - which would need to be shipped in a truck - for just 50 dollars), and, of course, the choice of paying for a bag should be passed on to the consumer.
See above.