Michigan smoking ban pinches bars

A new state report found that sales in bars that serve food declined in the first year of Michigan's smoking ban, but doesn't shed light on whether more people are smoking and drinking at home, state Department of Treasury officials said. The department's report, issued in December, was based on sales-tax revenue and actual sales in bars, restaurants, nightclubs and hotel dining rooms, and is not intended to be a full barometer of whether the ban is hampering businesses. The ban was signed into law by former Gov. Jennifer Granholm in December 2009, and took effect May 1, 2010. Liquor sales inside establishments dipped 3.2 percent the year following the ban, but increased by the same percentage outside places of business, according to the report. Meanwhile, cigarette sales declined 6.4 percent, compared to a 3.9 percent decline the year before the ban took effect.

The report attributed the corresponding decline in liquor sales in establishments to patrons who once liked to drink and smoke simultaneously. In other words, people likely spent less time and money at bars because they couldn't smoke inside, the report says. "It seems likely that the smoking ban reduced the opportunity for cigarette smoking and, as a result, reduced taxable cigarette sales," the report says. Club Keno and Pull Tab sales declined 13.6 percent in the year after the ban took effect, compared to a 0.7 percent decline in Club game sales the year before the ban took effect. It's too early to know if money that would otherwise have been spent on liquor, cigarettes and lottery games in bars was instead spent in stores where those items can be purchased, said Terry Stanton, state Department of Treasury spokesman. The state is unable to determine if there was simply a shift in sales tax collection of where the items were purchased, as opposed to a net lost in tax revenue, Stanton added. "We do not have the information necessary to infer where the money that would have been spent on those items absent the ban was actually spent," Stanton said. Only bars with that serve food showed declining beverage, cigarette and state lottery ticket sales in the first year of the ban based on sales tax figures, the report says.

The report says bars that serve liquor and food produced 2.76 percent less sales tax revenue and bars that serve beer and wine only with food produced 3.71 percent less sales tax revenue in the ban's first year. The other reported categories, including hotels, night clubs and restaurants, reported sales tax collection increases in the ban's first year. About half of all sales tax collections from eating and drinking establishment tax revenue come from family restaurants, which showed a 4.15 percent increase in tax revenue in the ban's first year. "The ban doesn't appear to have affected restaurants in a material way," Stanton said. Hotel dining rooms saw a 10.13 percent increase in tax revenue during that time. Those figures could suggest that the smoking ban not only didn't deter business to family restaurants and hotel dining rooms, but also brought back customers who previously avoided those establishments where smoking was once allowed. Statewide sales tax collections from eating and drinking establishments were up 2.64 percent in the first year of the smoking ban, compared to a decrease of 1.33 percent the year before.

Those positive figures indicate the smoking ban isn't hindering business where smoking was once allowed, said Amanda Bosherz, spokeswoman for the American Cancer Society. Bosherz cited a study that says there was a 93 percent reduction in the amount of dangerous-particulate matter in 77 tested Michigan restaurants that once allowed smoking. The Michigan Department of Community Health study, released in October, says that 85 percent of those establishments registered poor to dangerous air quality prior to the ban's passage. The clear air is also proving to be a big plus for business, as seen in the treasury report, she added. "We definitely think that that has helped the increase because more people can breathe freely in these establishments," Bosherz said. While there are vocal opponents to the ban, "a majority of Michiganders have been in support of it as well and are enjoying it," she added. The mostly positive year-to-year figures may be more directly related to an uptick in the state economy during the one-year period, during which Michiganders may have had more expendable income, however, Stanton said. Statewide tax collections in the first year of the ban were up 6.39 percent, however, which suggests Michiganders were buying more things that year.

The report notes a study done in more stable economic times will produce more reliable results. Exceptions to the ban are granted in the law for casinos, cigar bars, tobacco specialty stores, home offices and motor vehicles. While smoking is allowed on casino gaming floors, it is banned in bars and restaurants within casinos. The law doesn't apply to American Indian-run casinos. Smoking is banned in outdoor areas if food and drink are served there. Private clubs, such as American Legion halls that require dues, were not exempted from the ban.