Los Angeles is debating a comprehensive ban on the sale of flavored tobacco products. Like clockwork, the California Fuels & Convenience Alliance, who represents gas stations and convenience stores, has delivered a report to the City Council claiming that banning menthol would cost the city jobs and taxes.
To reach this conclusion”Economic Impact of the Ban on Menthol Cigarettes in Los Angeles,” ignores the fact that the money that people are not spending on cigarettes would be spent on something else.
And that spending will create economic activity, including jobs and tax revenue. Significantly, as we demonstrated in our analysis of the California law banning the sale of flavored tobacco products statewide, reduced spending on tobacco products will lead to increased economic activity, including jobs and tax revenues.
Why? The jobs and economic activity generated by spending are quantified using economic multipliers. Because most of the money spent on tobacco products leaves California, spending on tobacco products has a low economic multiplier compared to the average dollar spent in California. Reducing spending on tobacco will, therefore, move spending into other areas that have higher economic multipliers and, so, will result in a net increase in economic activity and jobs.
Thus, while the new report is fine as far as it goes, the fact that it ignores this effect means that it is fundamentally misleading. Essentially, it assumes that people will simply bury the money they would have spent on tobacco products.
As the LA City Council and other policy makers consider flavor bans, they need to consider the total economic effects of the legislation, which is positive.
Any this discussion does not even mention the fact that reducing smoking almost immediately lower medical costs, all of which are paid by taxpayers either as taxpayers or through insurance premiums.
The bottom line: Flavored tobacco bans — including menthol — are a good deal for everyone but tobacco interests.