South Carolina a magnet for cigarette black market

South Carolina's low cigarette tax makes it a magnet for black market runners.

Since 1977, the state's tax has stayed at 7 cents per pack. That's 10 cents less than the next lowest state (Missouri) and $2.68 per pack less than the state with the highest tax (New York). Considering that the average tax nationwide is $1.21, buying cigarettes in South Carolina and trucking them to another state can be very lucrative.

There are two ways smugglers operate, said Earl Woodham, spokesman for the federal Bureau of Alcohol, Tobacco and Firearms office in North and South Carolina.

Smugglers buy lots of cigarettes at discount stores, usually in North or South Carolina which do not place stamps on packs making them untraceable. They take the cigarettes to places like New York City where smokers not only pay $2.75 per pack in taxes, but an additional $1.50 in taxes from the city for a total of $4.25 per pack. And that doesn't include the federal taxes and the cost of the cigarettes.

The other way smugglers operate is to steal trailer loads of cigarettes and take them to higher taxing states, he said. There are estimates that smugglers can make a $1 million from a tractor trailer load of stolen cigarettes.

Woodham said the smuggling problems won't change even if South Carolina adds a proposed 50 cent per pack tax. The difference is still so great that the state would need to raise it to $4 per pack to stop the black market trade to New York.