NY now has the nation's highest state cigarette tax. How much you'll pay per pack

A pack-a-day habit just got a lot costlier in New York.

A $1 cigarette tax hike enacted in the state budget in May took effect on Sept. 1, making New York's $5.35-per-pack tax the nation's highest state rate by far. That increase has pushed the total price for a pack of 20 cigarettes to $14 or more.

Making the cost dauntingly high was exactly the point. Gov. Kathy Hochul included the 23% tax hike in her budget proposal as a way to deter smoking and reduce the health damage it causes.

It wasn't a revenue grab. State officials expect the opposite, estimating that income from cigarette and tobacco taxes will drop to $823 million from $858 million this year — a 4% drop — due to the hefty tax increase and a general decline in tobacco use. It is projected to fall to $720 million three years later.

Anti-smoking advocates cheer the higher tax, saying it will steer teens from smoking and ultimately save lives. More than 28,000 New Yorkers die each year from smoking-related illnesses, according to the American Lung Association.

"Raising the tobacco tax is one of the most effective ways to promote smoking cessation, prevent youth initiation, and save the lives of New Yorkers," Trevor Summerfield, the lung association's New York advocacy director, said in a statement when the increase took effect.

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NY merchants fear customer loss, shift to illegal sales

The downside? Merchants who sell cigarettes say the tax increase hurts small businesses and will likely divert sales to the black market, which depletes revenue for the state while failing to reduce smoking.

"I personally believe it creates a black market where people find ways to sell things illegally," said Wali Malik, manager of a Chestnut Market convenience store and gas station in Orangeburg. "At the same time, you hurt legitimate businesses."

Losses may be worst for stores near New York's borders, where customers can easily drive to another state for cheaper smokes. Malik's Rockland County store is less than three miles from New Jersey, where the cigarette tax is $2.65 less than New York's.

Sure enough, Ahmed Ali, manager of a Lukoil station in nearby Northvale, N.J., said his cigarette sales noticeably went up after New York raised its tax. A pack of Marlboros cost $11.25 at his store. At Malik's store in Rockland, the price was $14.02 after the tax increase — the lowest he said he could legally charge under New York's rules.

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Good news for New Jersey stores

Ali's New Jersey business, which straddles the state border, offered a vivid illustration of the tax variation.

The store shelves were bare of cigarettes because the store section of the property is in Tappan, N.Y. Those items alone are stocked 30 feet away in a booth by the gas pumps, which are in Northvale, N.J. and subject to New Jersey taxes.

Customers have not reacted well to the tax increase.

"They curse us," said Muhammed Sheikh, manager of a Chestnut Market in Nyack. "We try to explain to them, this is not our fault."

Stores make little profit from cigarette sales. What matters most, Sheik and Malik said, is spillover business: the gas, food, beverages that regular customers also buy when they stop in for smokes. Losing smokers means losing all the rest.

What do other states charge?

New York hadn't raised its cigarette tax since 2010. Now it stands far above neighboring New Jersey ($2.70), Pennsylvania ($2.60), Connecticut ($4.35), Massachusetts ($3.51) and Vermont ($3.08), according to data from the Campaign for Tobacco-Free Kids.

Taxes are even higher in New York City, which adds its own $1.50 tax — a total of $6.85. That is exceeded only by Chicago, where combined city, county and state taxes on cigarettes total $7.16.

At the other end of the scale are Missouri, which taxes just 17 cents a pack, and Georgia, which charges 37 cents.

The Bodega and Small Business Group and other New York retailers condemned their state's increase, saying in a statement that New York already has the nation's biggest black market for cigarettes, with 54% sold illegally.

"Legitimate, taxpaying stores are forced to compete with unscrupulous retailers and individuals selling cigarettes on street corners," the statement read.

The lung association touted more favorable outcomes: with the tax increase, it said, an estimated 15,300 fewer New Yorkers will die from smoking and 14,400 fewer children will become adult smokers.

Erica Masin, executive director of the association's metro New York chapter, said, "We applaud the State for taking another step to drive prevention and cessation of these dangerous products."

Chris McKenna covers government and politics for The Journal News and USA Today Network. Reach him at cmckenna@gannett.com.

This article originally appeared on Rockland/Westchester Journal News: NY's cigarette tax hike: What you'll pay per pack