From the Winston-Salem (where they know something about cigarettes) Journal via the AP:
Fewer cigarettes have been sold in North Carolina since the state raised its tax on smokes, but revenue from the higher tax grew by $157 million, state officials said today.
Cigarette sales dropped by 18.5 percent as tax revenue increased in the first full year since the tax went up in September 2005, according to data from the state Division of Public Health and the Department of Revenue.
...
North Carolina's tax on cigarettes went from five cents to 30 cents on Sept. 1, 2005. It went up an additional five cents, to 35 cents total, on July 1, 2006.
Note: cigarette demand is inelastic so tax revenue will rise even while sales fall.
