New York - smokers crossing the border in search of cheaper cigarettes..

August 13, 2010 - Tax-choked smokers are fleeing over the border and onto Indian reservations in search of discount cigarettes and sending Gov. Paterson's anticipated tax windfall, well, up in smoke.

Cigarette sales statewide have tumbled by nearly a third since New York's highest-in-the-nation cig tax of $4.35 took effect on July 1, according to state tax data and sales reports released yesterday by retailers. (New York State - after tax increase cigarette sales plummet in c-stores..)

Combined with New York City's own cig levy, there's now a $5.85 tax on packs sold in the five boroughs. The current tax on a pack of cigarettes in Pennsylvania is $1.60. (Pennsylvania Budget Facts 2010: Tobacco Taxes)

"I come to Pennsylvania because it's so much cheaper," said Jeff Hochteil, a trucker from upstate Walden, NY, who saves nearly $50 each time he makes the 30-mile drive to Matamoras, Pa., to pick up cartons of smokes.

New York state sold 28.7 million cigarette tax stamps in July, down from 43.1 million the previous year, said a spokesman for the state Department of Taxation and Finance. That translates to $125 million in cig-tax revenue last month, barely more than the $119 million haul in July 2009 despite the massive tax hike.

The numbers confirm reports from convenience-store owners that cigarette sales have dropped 25 to 35 percent since the state hit smokers with a $1.60-a-pack increase.

Retailers said sales were off by as much as 45 percent in stores bordering low-tax states like Pennsylvania and Vermont and tax-free Indian reservations in western New York and on Long Island.

In June, the Legislature approved Paterson's plan to raise the state tax on cigarettes 58 percent as part of a breathtaking $290 million levy on tobacco products meant to save the teetering state treasury.

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.

"People aren't going to buy cigarettes in New York and now all the money is going everywhere else," said Darrell Dirr of upstate Middletown as he purchased smokes from one of the many tobacco outlets clustered over the Pennsylvania border.

Reference: Cig-taxed NYers run for border by BRENDAN SCOTT in Albany and CAROLYN SALAZAR in Matamoras, Pa., New York Post, 8/12/2010.