The 10-cent fee on recycled paper carryout bags is intended to encourage customers to bring reusable bags and reduce their dependence on single-use bags of all types, both paper and plastic. A small fee for paper bags - coupled with a ban on plastic bags - is the most effective and legally protected way to institute an ordinance.
Most all other cities and counties that have passed bans have included the paper bag fee component. The cost pass-through reimburses retailers for the costs of providing recycled paper carryout bags to their customers. All of the revenue from the cost pass-through remains with the store; it is not a tax and none of it goes to the city.