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Impact of a Smoking Ban on Restaurant and Bar Revenues --- El Paso, Texas, 2002

To study the impact of the El Paso smoking ban on all sectors of the local restaurant and bar industry, TDH and CDC obtained quarterly sales tax reports and monthly mixed-beverage tax receipts from the Texas Comptroller of Public Accounts. The sales tax reports provided revenue data for restaurants, bars, and retail businesses, grouped by Standardized Industrial Classification (SIC) codes. Categories were created for restaurants (SIC codes 5812, 5816, and 5817) and bars (SIC codes 5813 and 5814) ( 10 ). The sales tax reports included revenue generated by sales of meals and sales of beer and wine for establishments with beer and wine retailer permits; sales tax revenue data were used for 1990--2002. Other restaurant and bar revenue data came from reports filed by holders of mixed-beverage permits. The state's mixed-beverage gross receipts tax, enacted in 1994, is levied on revenue generated by sales of alcoholic beverages (e.g., liquor, beer, and wine) and nonalcoholic beverages and ice used in mixed drinks. Mixed-beverage revenue data were used for 1995--2002.

Multiple linear regression analysis was used to examine the effect of the El Paso smoking ban on changes in revenue over time. The following independent variables were considered: a variable indicating whether the smoking ban was in force, an ordinal variable to represent secular time, and three variables to indicate during which one of four calendar quarters the revenue data were collected. Two regression models were created for each of the following primary dependent variables: 1) revenue subject to sales tax from all restaurants and bars, restaurants only, and bars only; and 2) revenue subject to the mixed-beverage tax. For each category, the first model examined the association between the smoking ban and revenue, and the second examined the association between the smoking ban and the fraction of revenue as a percentage of El Paso's total retail revenues (SIC codes 5211--5999). This fraction accounts for economic variation that might impact revenue in all sectors of the retail economy ( 6 ).

Two sets of statistics were used to evaluate the quality of the models. The Durbin-Watson statistic was calculated for each model to determine if first-order autocorrelation was present. Variance inflation factors were examined to determine if multicollinearity was present in any of the models.

Restaurant, bar, and mixed-beverage revenues varied by quarter; in all categories, revenues usually were higher during the fourth quarter (October--December) of each year ( Figure 1 ). During all four quarters, bar and mixed-beverage revenues accounted for approximately 1% of total retail revenues ( Figure 2 ).

None of the regression models for restaurant, bar, or mixed-beverage revenues or for such revenues as percentages of total retail revenue over time showed any statistically significant changes after the smoking ban was implemented ( Table ). In addition, the results did not change when revenues were adjusted for inflation, and adjusting for changes in price did not change the results ( 8 ). In all models, the variance inflation factors had values of <2 for each of the independent variables, indicating that multicollinearity was not present, and the Durbin-Watson statistics indicated that none of the autocorrelations was statistically significant ( Table ).

Reported by: P Huang, MD, Texas Dept of Health. AK De, PhD, Div of Applied Public Health Training, Epidemiology Program Office; ME McCusker, MD, EIS Officer, CDC.

Acknowledgments

This report is based on contributions by M Boerm, P Gingiss, Univ of Houston; Research Div and Open Government Section, Office Texas Comptroller of Public Accounts.

References

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Figure 1

Figure 2

Table