New York ? The big cigarette tax increases that many states are instituting to balance their out-of-whack budgets are raising fears that the trend will make black-market smokes more profitable and lead to more cigarette smuggling.

Cigarette smuggling has been going on for generations and already costs states untold billions in lost tax revenue.

Criminal gangs stock up in low-tax states like Virginia and Missouri, truck the cigarettes north and illegally resell them in high-tax states like Michigan and New Jersey. Other buy cartons and cartons of tax-free smokes on Indian reservations and sell them elsewhere. Buyers order untaxed cartons of murky origin on the Internet. And ships arrive from China carrying cargo containers filled with counterfeit cigarettes.

Law enforcement officials and others worry that the widening price spread between taxed and untaxed cigarettes will only make the situation worse.

Phillip Awe, the chief tobacco law enforcer for the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, said the agency has taken notice. ATF is refining its national strategy for fighting cigarette trafficking, he said, and has substantially expanded its investigations, opening up some 700 new cases in the past five years.

“There are truckloads of cigarettes that are being transported across state lines right now,” he said, “all for the sake of exploiting the difference in the tax rates.”

Fourteen states have raised tobacco taxes in the past two years, according to the Tobacco Merchants Association, an industry group. With the economy in a slide, legislation asking for increases is pending in 19 other states. They include a proposed 50-cent increase in South Carolina, where the current 7-cent tax is the nation’s lowest.

New York state is raising its tax $1.25 to $2.75 a pack, the highest in the nation. New York City charges an additional $1.50, which will bring the cost of a typical pack of cigarettes here to $9.

Illegal cigarettes can put a big dent in state budgets. California officials estimate that taxes go unpaid on about 15 percent of all tobacco sold in its markets, at a cost of $276 million per year. New York put its losses at more than $576 million in a 2006 study.

Congress is considering bills that would increase the penalties for smuggling, bar the mailing of cigarettes, and require all tobacco products to carry a high-tech federal tax stamp that would enable law enforcement to spot counterfeits and identify packages that have illegally crossed state lines.