COLUMBIA — Columbia’s smoking ban has been blamed for favoring bars and restaurants with patios, business closures and now for decreasing dining tax revenues.
The smoking ban decreased dining revenue tax by an average of 5 percent, according to a preliminary report released Tuesday by the Federal Reserve Bank of St. Louis.
The effect of the decrease in sales tax will depend on the “magnitude of what the sales tax does for the city,” said Michael Pakko, author of the report, estimating the 5 percent decrease would equal $60,000 in lost revenue for the city.
“But that’s based on this data alone,” Pakko qualified.
The ban seems to have affected bars and restaurants the most, he said.
Pakko examined monthly sales-tax revenues for bars and restaurants in Columbia from January 2001 to July 2007. He also factored in variables, such as seasonality, an overall sales drop and a harsh winter. Pakko concluded that January 2006, when the smoking ban went into effect, marked a turning point in the data, with sales tax revenues starting a rapid decline.
He found that bars with patios were the exception to the shortfall.
“You have to have a patio to survive,” said one bar owner who was quoted anonymously in the report.
Pakko didn’t think the City Council “intended to promote patio building, but that was the effect,” Pakko said.
But even if bar and restaurant owners started building patios to give customers a place to smoke, the cost of building a patio would take away from their profits.
Those findings, coupled with the negative seven-month averages during 2007, made Pakko reasonably sure that Columbia’s smoking ban should take the majority of the blame for the revenue decline.
According to Pakko’s report, at least four business owners said the smoking ban was a factor in their decision to close. One business owner reported a 40 percent drop in alcohol sales and a 20 to 30 percent drop in food sales.
Third Ward Councilman Karl Skala wasn’t surprised by the 5 percent decrease but said he would like to see where Pakko got his numbers. However, Skala said the number of restaurants who benefited from the ban should balance out those that are losing money.
“Revenue across the board for restaurants has decreased,” Skala said. “We have to make sure the cause of that is the smoking ban, not a downturn in the economy.”
Skala said he considered smoking a public health issue, not a economic or civil liberties issue.
“I agree with the mayor on this regard; there are proven problems with secondhand smoke,” Skala said. “It is the first business of the government to protect the health of the people. It is incumbent on the government to protect those who don’t smoke.”
Pakko admitted that his study was limited by time.
“These findings are of course, preliminary,” Pakko wrote in his report. “With only seven months of data since the implementation of the smoke-free ordinance, any conclusion about the impact of the smoking ban should be considered tentative. The downturn in bar and restaurant business in Columbia may be associated with some other factor that has not been considered in this analysis.”
Though Pakko has no immediate plans to continue his research, he did say that it “would be an interesting topic to follow up on.”
The Colosseum Bistro, 402 E. Broadway, and its accompanying sports bar, Stumpy Joe Pete’s, is one of those businesses closing its doors, with owners claiming the smoking ban is the main culprit behind their decision to close. About 40 employees, including servers, dishwashers and cooks, will lose their jobs.
Last December, 20 to 25 bar regulars could usually be seen hanging out, eating chicken wings, drinking beer — and smoking, said Will Burns, head bartender and manager of the Bistro. This December, most nights consist of only four or five guys or some families coming in to the restaurant for dinner.
“The majority of people that came in here were smokers,” Burns said. “People still come out to have a meal, but when people are coming to eat food and food alone, not drink for six or seven hours, that has an effect.”
Burns described the regular Bistro customer as someone a little older than the normal college student and more “set in their ways.” Many customers told Burns the ban limited their freedom.
Shiloh Bar and Grill, 227 S. Sixth St., which Burns said was one of the few restaurant bars thriving since the ban, planned to move to the space being vacated by the Bistro early next year.