Tobacco taxation is a proven strategy to reduce cigarette consumption, but its impact may be reduced by industry pricing tactics. Relatively few studies have examined the extent to which tobacco industry pricing strategies attenuate the impact of taxes on cigarette demand. This study compared the impacts of the 2018 and 2023 tobacco taxes in Singapore, focusing on changes in cigarette demand and industry pricing responses.
We analysed brand-level recommended retail pricing (RRP) and monthly sales volume data from 2016 to 2023. We grouped brands into five price tiers, using weighted averages to assess changes in RRP and interrupted time series analyses to assess changes in cigarette demand and calculated price elasticity of demand (PED) before and after each tax increase.
The 10% tax increase in 2018 raised average RRP by 4.6% and reduced cigarette demand by 4.0% (PED=–0.22). The 15% tax increase in 2023 raised average RRP by 13.8% and reduced demand by 7.5% (PED=–0.86). In 2018, tobacco companies used price smoothing and undershifting to protect cheaper brands, whereas in 2023, price increases were more uniform across all price tiers.
Singapore’s 2023 tobacco tax increase was predictably more impactful than the 2018 increase, both in terms of price change and demand reduction. Industry pricing tactics blunted the effect of the 2018 tax but were less protective in 2023. Repeated, substantial tax increases, coupled with regulatory oversight of pricing practices, are important to maximise public health impacts.