The widening cigarette prices could increase the cigarette traffic

The higher cigarette tax strike a lot of markets budget and also lead to more cigarette contrabands. Cigarette smuggling costs states untold billions in lost tax revenue.

Criminal teams stock up in low-tax states like Virginia and Missouri. They trade the cigarettes illegally and resell them in high-tax states like Michigan and New Jersey. Cigarette contrabands buy cartons of tax-free smokes on Indian reservations and sell them elsewhere. Buyers order untaxed cartons on the Internet. And ships arrive from China carrying load containers filled with forgery cigarettes. Smugglers have also long turned to falsification cigarette tax stamps to change packs on the black market.

Officials worry that the widening price spread between taxed and untaxed cigarettes will only make the situation worse.

Phillip Awe, the chief tobacco law enforcer for the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, said that in the past five years were discovered 700 cases of cigarette traffics.

"There are truckloads of cigarettes that are being transported across state lines right now," he said, "all for the sake of exploiting the difference in the tax rates."

According to the Tobacco Merchants Association fourteen states have raised tobacco taxes in the past two years. For example New York State is raising its tax $1.25 to $2.75 a pack, the highest in the nation. New York City charges an additional $1.50, which will bring the cost of a typical pack of cigarettes here to $9.

Arthur Katz, executive director of the New York State Association of Wholesale Marketers and Distributors, which represents tobacco dealers, said the changes are certain to drive greater numbers of smokers to underground sources for their cigarettes.

"You'd have to be crazy to go and buy cigarettes at the store at almost $9 per pack," Katz said.

Indian reservations in New Mexico, Oklahoma and other states also have had trouble with cigarette contrabands.

The Poospatuck Reservation is an Indian reservation in the community of Mastic, Suffolk County, New York, United States. It became the major sources of contraband cigarettes. Hidden away in a nondescript suburb on eastern Long Island, it is a 60-mile haul from New York City.

The reservation sold a tremendous 10.4 million cartons of cigarettes last year - enough to supply every smoker in New York City with a pack a day for 3 1/2 months.

Rules regarding cigarettes sold on Indian reservations vary from state to state. But in general, buyers may not purchase huge quantities of low-tax or untaxed reservation cigarettes and resell them elsewhere without paying a state tax.

If officials will not stop cigarettes traffic, illegal cigarettes will put a big dent in state budgets.

California officials estimate that taxes go unpaid on about 15% of all tobacco sold in its markets, at a cost of $276 million per year. New York put its losses at more than $576 million in a study released in 2006.

Congress considers that the increase of penalties for smuggling, the ban of shipment of cigarettes through the mail, and require of all tobacco products to carry a high-technology federal tax stamp would stop the trade of illegal cigarettes.