Objective To re-estimate price elasticity of different income groups’ demand for cigarette in terms of the lastest national tobacco consumption data and provide policy-makers with evidence to make decision on public policy of tobacco control. Methods A total of 16 056 adults of different income were surveyed in 27 provinces in 2002 and the data analyzed by using two-part model (logistic and log-linear model). Results We found that the demand elasticities were -0.589, -0.234, -0.017 and 0.247 for the poor group, low income group, middle income group and high income group, respectively. Conclusions Increasing tobacco tax will result in decreasing more cigarette consumption of lower income groups than higher groups, bearing more taxation of higher income groups than lower income groups, therefore tobacco taxation is not regressive.