Only weeks after Mayor Bloomberg’s radical increase in the excise taxes on cigarettes, the early returns are starting to come in, and city officials have smoke coming out of their ears. It seems the $1.42-a-pack cigarette tax has triggered a booming business in online tobacco sales, so much so that Martha Stark, the city’s finance commissioner, is warning the city will have to tighten its laws. It’s early yet, but the indications are that the impact of the Bloomberg tax hike has been less to stop people from smoking than it has been to drive people to purchase their cigarettes in jurisdictions other than New York.

Call it Excise 101. In New York, it seems, cigarette sales have plummeted by a third from last August. That statistic coincides with a recent study by the New York Academy of Medicine which found that many New Yorkers are smoking more cigarettes, not to mention drinking more alcohol, in the aftermath of September 11. How are they managing this? The way one reckoned they would before Mr. Bloomberg pushed through his tax hike, which boosted the average price of a pack above $7. They are buying their cigarettes out of state, at Indian reservations, and on-line.

With a burdensome tax imposed on a product that people have trouble quitting, it is inevitable that significant tax avoidance and evasion, and black market activities, will take root. The black market is already booming inside the city. In late August, the city showed off 11,871 packs — or 237,420 cigarettes — seized from unlicensed sellers between February 2001 and February 2002. And these were being illegally sold before the tax hike.

Now, on top of the black market, New York smokers are getting innovative. The Associated Press reports that cyber cigarette sales are booming. “Volume is w-a-a-a-ay up, no question about it,” the wire quotes one vender, Scott Herring of nccigarettes.com. His sales have recently soared by some two-thirds, though more broadly, the AP notes, it is hard to gauge how big the boom in on-line cigarette sales is, because the refusal by most retailers and customers to report sales is the foundation of the Internet cigarette sales business.

The AP quotes a study done last year by Massachusetts based Forrester Research projecting that online cigarette sales will top $1 billion this year and exceed $5 billion by 2005, accounting for 14% of total sales. Both Governor Pataki, who put through his own tax increase on cigarettes, and Mr. Bloomberg factored in a certain amount of revenue loss from tax avoidance and evasion. But what is going on appears to exceed what they had discounted for.

In addition, the boom in on-line cigarette sales has exposed another issue — the fact that underage youngsters may be have an easier time purchasing cigarettes, once the business has been driven away from the honest bodega owners in our our neighborhoods. So comes now the pressure for new laws, more active enforcement by federal revenuers, not to mention state and local officials. It’s getting to the point where the government is — to paraphrase the famous old cigarette advertisement — taxing more and enjoying it less.