To solve this question, let us deploy IMS's four-step technique.

STEP #1 -> IDENTIFY THE QUESTION TYPE

Let us read the question stem to identify the question type.



The stem indicates a weakening question.

STEP #2 -> DECONSTRUCT THE ARGUMENT

In a weakening question, it is a must to deconstruct the argument by figuring out the conclusion and the premise(s). Let us therefore read the argument first and deconstruct it soon after.



PLAN: Vorland’s government is planning a nationwide ban on smoking in restaurants.
CONCLUSION: The objection that the ban would reduce restaurants’ revenues is ill founded.
PREMISE(S): -> Several towns in Vorland enacted restaurant smoking restrictions five years ago.
-> Since then, the amount the government collects in restaurant meal taxes in those towns has increased 34 percent, on average, but only 26 percent elsewhere in Vorland, and the amount collected in restaurant meal taxes closely reflects restaurants’ revenues.

STEP #3 -> FRAME A SHADOW ANSWER

To frame a shadow answer, we need to know what the right answer should do. The author, we see, is defending the ban by claiming that the ban would not really reduce restaurants' revenues. To prove his point, he says that several towns in Vorland enacted restaurant smoking restrictions five years ago and that these restrictions have actually not led to a decrease in the revenue. As a matter of fact, they indicate an increase. We need to select an answer option that undermines this defense. Remember, an excellent way to undermine the defense would be to attack the reasoning of the author. Another way to undermine it would be to challenge the author's premise.

SHADOW ANSWER: Any situation that leads us to believe that the ban on smoking may actually impact the revenue of restaurants, thereby undermining the defense of the ban.

STEP #4 -> ELIMINATE INCORRECT ANSWERS

Answer options that do not match the shadow answer can be eliminated.

(A) When the state first imposed a restaurant meal tax, opponents predicted that restaurants’ revenues would decline as a result, a prediction that proved to be correct in the short term. - NOT A MATCH - We are looking for an answer option that undermines the defense of the author, leading us to believe that the BAN ON SMOKING may actually impact the revenue of restaurants. This option talks of restaurant meal tax and in no way impacts the argument. - ELIMINATE

(B) The tax on meals in restaurants is higher than the tax on many other goods and services. - NOT A MATCH - The stated comparison between tax on meals in restaurants and many other goods and services is irrelevant; it clearly does not do what we want the right answer to do. - ELIMINATE

(C) Over the last five years, smoking has steadily declined throughout Vorland. - NOT A MATCH - If smoking has actually declined throughout Vorland in the past five years, we will still not have any idea regarding whether the ban on smoking will impact the revenue of restaurants. - ELIMINATE

(D) In many of the towns that restrict smoking in restaurants, restaurants can maintain separate dining areas where smoking is permitted. - MATCHES THE SHADOW ANSWER - This answer option directly challenges the premise of the author, and by doing do, it undermines his defense of the ban. If in many of the towns that restrict smoking in restaurants, restaurants can maintain separate dining areas where smoking is permitted, the witnessed increase in revenue IS NOT because of the restrictions but because it is possible for restaurants to maintain separate dining areas where smoking is permitted. However, if smoking is banned and if restaurants cannot have these separate 'smoking areas', the revenue may as well plummet. - KEEP

(E) Over the last five years, government revenues from sales taxes have grown no faster in the towns with restaurant smoking restrictions than in the towns that have no such restrictions. - NOT A MATCH - The stated comparison regarding sales tax is irrelevant and does not impact the argument in any way. - ELIMINATE

Hence, (D) becomes the correct answer.