In fact the government of New York City is perfectly within their rights to confiscate that which they would consider contraband, in this case cigarettes without a NYC tax stamp. Granted, unless you get pulled over for something else, I don't think NY's Finest are going to be stopping motorists coming into the city checking for out of city or out of state purchased cigarettes. But they can do it.
You are correct. Just remember, liberals (including RINO's and Democrats) think that they own all of your money, and just argue about how much to let you keep. Ask a liberal politician some time if he or she thinks there is or should be a limit to the income tax, and what it should be. They probably will say yes, but they won't tell you what it is.