Smokers finding ways to get fix, avoid tax hit

NEW YORK — As state after deficit-ridden state ratchets up cigarette taxes, authorities are bracing for some unwelcome consequences in the form of more aggressive smuggling and bolder use of the Internet as a tax-evading tobacco shop.

Never before have so many states — 17 this year alone — approved cigarette-tax hikes in such a short time. Anti-smoking advocates call it a win-win situation, enabling states to reduce smoking and budget deficits simultaneously.

In many legislatures, even tax-averse conservatives have supported the increases — expected to generate $2.2 billion annually in new revenue — as budget woes and anti-smoking militancy transform cigarette buyers into America's easiest-to-tax constituency.

With prices as high as $7 a pack in New York City, and more than $4 in many states, some smokers are trying harder than ever to quit. Those unwilling or unable to kick the habit are left with several options — legal, quasi-legal and illegal — for getting a nicotine hit without a tax hit.

Those who choose the illegal route are often successful. The Bureau of Alcohol, Tobacco and Firearms estimates state and federal authorities lose more than $1.5 billion annually in evaded cigarette taxes.

The ATF concentrates on major interstate smuggling — operations involving at least 60,000 cigarettes. The workload has increased steadily in recent years; ATF now has about 150 active cigarette-smuggling cases.

"There's no question some large-scale organized crime gangs are involved," said ATF spokesman John D'Angelo. "Not only are these criminals depriving state and federal governments of tax revenue, they're using their profits for other criminal activity."

The primary sources of smuggled cigarettes are tobacco-growing states with low taxes — for example, Virginia with a lowest-in-the-nation tax of 2 1/2 cents per pack, and Kentucky with a 3-cent per pack tax.

In Ohio, where the tax recently rose 31 cents per pack, officials plan to monitor the Kentucky border for smugglers, and police are being trained to check for Ohio tax stamps on packs sold at stores. A carton of name-brand cigarettes in Ohio costs about $40, compared to about $25 in Kentucky.

In Maryland, where the per-pack tax rose to $1 in June, authorities are on alert for more smuggling from Virginia. There were only five arrests in Maryland for cigarette smuggling in 1997, and more than 50 so far this year.