Almost 60 percent of cigarettes in New York State come in illegally, according to a report by the Tax Foundation.
The fiscally conservative group found New York led the country in the number of inbound smuggled cigarette — 58 percent, compared to Arizona’s 49.3 percent, the second highest rate in the U.S.
New York City has the highest cigarette tax, with state taxes at $4.35 per pack plus an additional $1.50 per pack added by the city.
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Statewide, the report also found smuggling has jumped 62 percent since 2006. Taxes on cigarettes also rose, by about 190 percent in that same time period.
Budget documents recently revealed New York State raked in almost $1.3 billion from cigarette sales in 2014, about $171 million less than in 2013.
Tax Foundation Economist Scott Drenkard put the blame for the rise in the illegal trade on unintended consequences.
"High tax rates on cigarettes have led to unreliable revenue and increased criminal activity," Drenkard said in a statement. "Policymakers seeking additional revenue would be better off choosing more stable sources that don’t incentivize black market behavior."
In 2014, New York State Attorney General Eric Schniederman’s office filed a filed a $70 million lawsuit against FedEx for allegedly shipping almost 80 million illegal cigarettes to across the state the state.
"Smugglers and tax dodgers are flouting laws that protect the health of our citizens — especially children and teenagers, who are particularly vulnerable to low-priced cigarettes and deceptive advertising,” said Schneiderman spokeswoman Liz DeBold in a statement Monday.
Last month, the New York Post reported that Mayor Bill de Blasio's administration quietly sued a Virginia-based smoke shop for conspiring to sell more than 2,500 cartons of cigarettes, in the city. Taxes on a single carton amount to $58.50.
Last fall, New York City Health Department data revealed more than 1 million New Yorkers are smokers. Sixteen percent of residents smoked in 2013, up from 14 percent in 2010.