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New York State ranks first for smuggled cigarettes in U.S.

By Hilary Russ

(Reuters) - New York State sells more bootlegged cigarettes than any state, with 60.9 percent of the cigarettes sold secreted into its borders improperly, according to a report released on Thursday.

Arizona and New Mexico also had high rates of smuggled cigarettes, at 54.4 percent and 53.0 percent, respectively, according to the Tax Foundation, a Washington, D.C., business-oriented tax research organization.

New York has higher tobacco taxes than any other state, at $4.35 per pack. That does not include a local New York City tax of $1.50 per pack, the group said.

"Dramatic increases in state cigarette taxes have yielded additional revenue for priorities like public health, but have also fueled the rise of organized crime and law enforcement corruption," said Tax Foundation economist Scott Drenkard in a statement.

The foundation used data from the Mackinac Center for Public Policy, a Michigan think-tank.

Cigarettes can be bootlegged by bringing in lower-priced packs from other states, counterfeiting state tax stamps, hijacking trucks or bribing officials to ignore illegal shipments.

States, cities and the federal government have hiked taxes on tobacco products in order to raise revenue and encourage smokers to quit.

A USA Today analysis found in September that a 39 cent federal cigarette tax hike signed by President Barack Obama in 2009 contributed to at least 3 million more people giving up the habit.

(Reporting by Hilary Russ; Editing by Leslie Adler)

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