


The U.S. Constitution does not give Congress the power to regulate smoking or use of tobacco. However, Congress can use the Commerce Clause to regulate smoking or enact a nationwide ban on smoking in public places including restaurants and bars. It has not opted to do so. Consequently, smoke-free laws are a result of state and local occupational safety and health laws.
When smoke-free laws were introduced, critics were quick to point out that it would have a negative effect on many local economies. Many predicted that bars and restaurants would be the most affected by smoke-free laws.
Supporters argue that strong smoke-free laws are important. There is overwhelming scientific evidence that secondhand tobacco smoke is a direct cause of lung cancer, heart disease, and lung and bronchial infections. Smoke-free laws would help protect restaurant and bar employees and patrons from the harms of secondhand smoke. It would also provide people who quit smoking with public environments free from any pressure or temptation to smoke.
New York City implemented the law prohibiting smoking in all of the city’s restaurants and bars on March 30, 2003. The March 2004 report by the New York City Department of Health and Mental Hygiene, Department of Small Business Services, and Economic Development Corporation clearly indicated that since the law went into effect, business receipts for restaurants and bars have increased, employment has risen, virtually all establishments are complying with the law, and the number of new liquor licenses issued has increased. All this indicated that bars and restaurants in New York City are prospering. The business tax receipts for restaurants and bars increased 8.7% from April 1, 2003, to January 31, 2004, compared to the same period in 2002-2003. Between March 2003 to December 2003, employment in New York City restaurants and bars increased by 10,600 jobs. The 2004 Zagat New York City Restaurant Survey revealed that 23% of the nearly 30,000 respondents ate out more often because of the new smoke free laws. Only four percent said they were eating out less.
Commonwealth of Massachusetts’ comprehensive statewide smoke-free law became effective on July 5, 2004. A study conducted by the Harvard School of Public Health revealed that the law did not negatively affect statewide meals and alcoholic beverage excise tax collections.
Delaware passed its smoke-free law in November 2002. A year later, the data from the state’s Alcohol Beverage Control Commission showed that the number of restaurant, tavern, and taproom licenses and employment in the state’s food service and drinking establishments increased in the year since the law took effect.
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4 Responses to “Did Smoke-Free Laws Have a Negative Impact on Businesses?”
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While personally I’m a huge fan of the laws and stay out longer and go out more frequently as a result, I’m curious to know how this factoid:
“The business tax receipts for restaurants and bars increased 8.7% from April 1, 2003, to January 31, 2004″
compares to the delta over the same time period for other kinds of businesses in NYC. Perhaps this lift was simply a fxn of a general rise — ?
Hi Anittah,
Here is a link to the actual report: http://www.nyc.gov/html/doh/downloads/pdf/smoke/sfaa-2004report.pdf. It doesn’t provide any data on other types of businesses. The IRS website (http://www.irs.gov/taxstats/bustaxstats/index.html) has stats from previous years. Under Sole Proprietorships (which had more recent data than S Corp. and Partnerships), in the “food services and drinking places” category, it seems business tax receipts went up over 30% nationally from 2003 to 2004. A couple other categories under sole proprietorships: sports/hobbies/books/music stores went from $8,253,520 in 2003 to $7,479,548 in 2004; and food and beverage stores went from $29,110,360 to $26,133,236. You may be right; the lift may have just been the result of a general rise that was felt nationally.
If we are to attribute every positive economic activity to the general economic condition, then the number of restaurants and bars would have increased and this increase would have contributed to the rise. But there was no significant rise in the number of restaurants and bars in New York City during that period. The State of Smoke-Free New York: A One-Year Review. New York, New York: New York City Department of Health and Mental Hygiene, 2004 (page 4) clearly states that number of restaurants and bars in the city remained essentially unchanged between the third quarter of 2002 and the third quarter of 2003.