The effects of the tobacco products control amendment act of 1999 on restaurant revenues in South Africa: a panel data approach

Blecher, Evan H

The effects of the tobacco products control amendment act of 1999 on restaurant revenues in South Africa: a panel data approach

Journal Article

2006

Journal Title

South African Journal of Economics

Link to Journal

http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1813-6982

Publisher

Wiley

Publisher

University of Cape Town

Department

School of Economics

Faculty

Faculty of Commerce

Abstract

Prior to the implementation of this legislation the restaurant industry lobbied that a full-scale ban would severely hurt business. Their lobbying resulted in a restrictive restaurant smoking policy rather than a full-scale ban. Nevertheless the industry argued that this would still severely hurt business citing international evidence in support. The objective of this paper is to investigate the change in restaurant revenues after the implementation of a public smoking ban in South Africa. We use a fixed effects panel model to explore the response of restaurant revenues to the imposition of the ban. Provincial data is used over the period 1995 to 2003 and VAT receipts are used as a proxy of restaurant turnover. We conclude that restrictive restaurant smoking policies have not had a negative effect on restaurant revenue, indicating that claims of countrywide restaurant business declines under such a policy are unwarranted.