'That's What We Warned Would Happen, and Obviously It Has Come to Fruition'

Stunner: Massively increasing taxes on cigarettes results in plummeting tax revenue for New York City and the state. Gee, it's not like there's a track record of success here. Every time they jack up taxes on smokes people cross into the border states or go to the Indian reservations. Oh well, now with a budget shortfall they'll have to try something novel, like increasing taxes on cigarettes. These buttheads just will never get it.

Sales of taxed cigarettes have plummeted a staggering 27 percent statewide since the highest cigarette tax in the nation took hold in July, a Post analysis has found.

Law-abiding cigarette dealers have sold an average of 30 million packs of smokes in each of the last four months -- some 11 million fewer than before Gov. Paterson and lawmakers raised the state tax on cigarettes to $4.35 a pack in a scramble to close a massive budget gap.

Such a drop in smoking would exceed even the wildest imaginations of anti-smoking advocates, who estimated the arrival of the $10 cigarette pack would trim sales by 8 to 10 percent as cash-squeezed smokers cut back or quit.

More likely, experts say, sales have simply shifted to nearby tax havens that allow New Yorkers to stockpile cut-rate smokes at the expense of the state treasury.

Both Pennsylvania and Vermont, which each have significantly lower cigarette taxes, have seen tobacco sales rise since New York's hike, The Post's analysis found.

The Post reported in August that retailers said sales were off by as much as 45 percent in stores bordering low-tax states like Pennsylvania and Vermont, as well as tax-free Indian reservations in western New York and on Long Island.

The hike raises the average price of a pack of Marlboros to $11.60 in New York City, compared to $5.93 in Matamoras, Pa.

Anecdotal reports suggest sales are booming on in-state Indian reservations, where tribes have so far stymied Paterson's efforts to collect taxes on cigarettes sold to non-Native Americans.

"That's what we warned would happen, and obviously it has come to fruition," said James Calvin, of the New York Association of Convenience Stores.

"Every tax increase drives more smokers to that dark, shadowy, unregulated, unlicensed, untaxed side of the street. The whole policy is self-defeating."

If the trend continues, the state could fall far short of the $260 million windfall Paterson expected from the 58 percent tax hike.