Economic Impact

Experts who predict Nevada's economic future have mixed views about the potential impact on state tax revenue as a result of new, voter-approved prohibitions on smoking in restaurants and other places.

The state Economic Forum, a group of five people who predict the
state's tax collections, must assess how the smoking restrictions
approved by statewide voters Nov. 7 might affect sales and taxes.

During the 2007 Legislature, lawmakers will depend on the forum's predictions in determining the final amount of a two-year state general fund spending plan that should approach $7 billion.

"I don't see how it cannot have a negative impact," forum member Michael Small said in discussing the Nevada Clean Indoor Air Act, Question 5 on the Nov. 7 ballot.

The act bans smoking in restaurants and bars that serve food. Smoking remains legal in stand-alone bars and casinos.

Bill Anderson, who developed future tax predictions on behalf of the state Budget Division, said he doesn't expect any major impact on tax revenues because "folks will find other places to smoke."

Russell Guindon, a legislative fiscal analyst, said the restrictions might cause smokers to patronize restaurants less often, but that potential loss of revenue might be offset by an increase in business from nonsmokers.

Buffy Martin Tarbox, government relations director of the American Cancer Society, thinks consumption will drop if the new smoking restrictions take effect, but does not envision a sizable drop in cigarette tax revenues.

After the 2003 Legislature increased the tax on a pack of cigarettes from 35 cents to 80 cents, monthly sales plummeted from more than 14 million to slightly more than 6 million. But sales turned around and climbed to 15 million packs.

Opponents of Question 5 have filed a legal challenge contending that Question 5 is unconstitutionally vague because it doesn't specify who should be held accountable if someone lights up, and the result will be "arbitrary and discriminatory enforcement."

Clark County District Judge Douglas Herndon has issued a temporary restraining order preventing the law from taking effect in the Las Vegas area pending outcome of a Dec. 19 hearing on its constitutionality.