Effect of eliminating the sale of duty-free tobacco products: a natural experiment during the COVID-19 pandemic in Taiwan, 2020-2023.

Abstract

Introduction: Amidst the global effort to curb cross-border transmission of COVID-19, numerous nations enforced international travel restrictions. One example is Taiwan, which witnessed an 85%-90% reduction in international travel during 2020-2022 compared with the preceding decade's average. Consequently, sales of duty-free cigarettes plummeted by approximately 90%.

Objectives: This study leverages the virtual elimination of duty-free cigarette sales during the COVID-19 pandemic in Taiwan as a natural experiment to scrutinise the impact of banning such sales on cigarette consumption. The focus is on whether the drastic reduction in duty-free sales was compensated by an increase in taxed cigarette sales.

Methods: We analysed trends in sales of both duty-free and taxed cigarettes, using data from Taiwan Ministry of Finance and Customs Administration between 2010 and 2023. We used quadratic regression models to fit historical taxed and duty-free sales data from 2010 to 2019. Subsequently, we projected total sales between 2020 and 2023 under a business-as-usual scenario where no travel ban occurred and duty-free sales were not disrupted.

Results: The virtual eradication of duty-free cigarette sales was only partially offset by an upturn in taxed cigarette sales. The sales projected under the business-as-usual scenario consistently exceed the actual observations, with real data falling below the lower bound of the 95% CI in both 2021 and 2022.

Conclusions: Duty-free tobacco sales associated with international travel should be abolished for the benefit of both public health and government tax revenue.