Researcher: Restaurant Taxes Grow Despite Smoking Ban
Report examines economic impact of measure
Last updated Tuesday, May 31, 2005 10:40 PM CDT in Front
By John L. Moore
The Morning News
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FAYETTEVILLE -- A ban enacted last year on smoking in restaurants and other public places appears to have had no immediate negative effect on hotel, motel and restaurant tax collections, said a University of Arkansas economist with the Center for Business and Economic Research.
Kathy Deck, associate director of the center, presented a report prepared for the Northwest Arkansas Tobacco-Free Coalition at a meeting Tuesday at Fayetteville Public Library.
The report examined the economic impact on Fayetteville's restaurants using hotel, motel and restaurant taxes from 2003 and 2004 for restaurants open at least one year. Deck also provided information showing the trend in those taxes over the past decade, as well as other economic indicators such as sales taxes and national economic data.
Hotel, motel and restaurant receipts for restaurants open at least one year in Fayetteville grew almost 6 percent when compared with 2003.
"This is a good sign," Deck said. "In 2004, I would find it a very difficult comment to make to say there was any negative impact from the smoking ban."
Deck urged caution, however, in placing too much emphasis on the results of the smoking ban study because only nine months of data were available for the study from the time the ban went into effect in March 2004.
Deck also said the numbers presented a good picture overall, but that there probably was some effect from the ban on some independent restaurants. Determining that effect, however, is difficult because it is almost impossible to sort out the variables that contribute to a single restaurant's success or failure.
Eleven restaurants closed their doors between 2003 and 2004, she said.
Patricia Babb, who owns Village Inn Restaurants with her husband, said sales at the restaurant did drop initially. Babb and her husband opposed the ban in 2003.
"I want to emphasize that we're not trying to buck the system and we're not pro smoking. We're pro property rights," Babb said.
Babb said she felt individual business owners should have the right to decide whether or not to allow smoking in their establishments.
"There are advantages to the no-smoking policy," Babb said. "Our restaurants are cleaner and we don't have to provide for nonsmoking and smoking seating."
Babb also said sales at the business rebounded for the most part after the initial hit from the smoke-free ordinance. However, she said the late night, weekend business did not recover fully.
The hotel, motel and restaurant taxes are one of the best publicly available economic indicators to study the effect of the smoking ban on restaurants, Deck said.
Hotel, motel and restaurant taxes are also known as advertising and promotion taxes. Bentonville and Fayetteville tax overnight stays at hotels and motels as well as food and beverages sold in restaurants. Rogers and Springdale tax only overnight stays.
The ban in Fayetteville includes most indoor public places except bars, retail tobacco stores and designated hotel and motel guest rooms. Outdoor patio areas, private residences, vehicles and state and federally owned buildings are also exempt, according to the ordinance.
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