Smoke-free law associated with higher-than-expected taxable retail sales for bars and taverns in Washington State

Abstract

Introduction: Continued progress in implementing smoke-free laws throughout the United States would benefit from documenting positive economic effects, particularly for the hospitality industry. This study describes changes in sales revenue in bars and taverns since December 2005, when a statewide smoke-free law in Washington State went into effect.

Methods: Using 24 quarters of inflation-adjusted taxable retail sales data from 2002 through 2007, we fitted a regression model to estimate the effect of the smoke-free law on sales revenue, controlling for seasonality and other economic factors.

Results: We found no immediate change in bar revenues in the first quarter of 2006, but taxable retail sales grew significantly through the fourth quarter of 2007. In the 2 years after the smoke-free law was implemented, sales revenues were $105.5 million higher than expected for bars and taverns in Washington State.

Conclusion: The higher-than-expected revenue from taxable sales in bars and taverns after the implementation of smoke-free laws in Washington State provided extra funds to the state general fund. Potential increases in revenue in other jurisdictions that implement smoke-free indoor air policies could provide funds to benefit residents of those jurisdictions.

Figure.

Predicted values from a regression model predicting taxable retail sales (TRS) in bars and taverns in Washington State after the implementation of a smoke-free law, from the fourth quarter of 2005 (Q4:2005) through the fourth quarter of 2007 (Q4:2007). Values are adjusted for seasonality, unemployment, and personal income from 2002 through 2007 (data before Q4:2005 are not shown).