Small border towns near states with high tobacco taxes have enjoyed a burst of prosperity from smokers who cross state lines to buy cheaper cigarettes, the Wall Street Journal reported March 2.

Larchwood, Iowa, which is 20 miles from South Dakota's biggest city, Sioux Falls, is one such boom town. The town of 800 has drawn thousands of visitors from South Dakota since the state raised its tobacco tax from 53 cents per pack to $1.53; that makes a carton of cigarettes $11.70 cheaper in Iowa than South Dakota.

"It's a gold rush," said Larry Zuraff, owner of the Larchwood Mini Mart, who sold $160,000 in cigarettes in January -- three times more than he sold in all of 2006.

Other tax-driven boom towns include Sunland Park, N.M., where cigarettes sell for $5 less per carton than in nearby El Paso, Texas; Hudson, Wis., visited by St. Paul, Minn., residents in a 20-minute drive to save $7 per carton in taxes; and the towns of northern Delaware, where Philadelphia residents can save $8 per carton.

Research conducted in 2002 found that 13 percent of smokers said they had crossed state borders to buy cheaper cigarettes.

Some states have laws limiting the amount of cigarettes that can be purchased in other states and brought back across their borders by residents. In South Dakota, the law says it is illegal to buy cigarettes in Iowa and bring them back home, but the law is not enforced.

In any event, the prosperity in towns like Larchwood may be short-lived: the Iowa legislature is considering a proposal to raise cigarette taxes by up to $10 per carton.