A new report, by anti-smoking group ASH Scotland, looked at factors such as the cost to the NHS and the loss of production caused by workers on smoke breaks, illness and premature deaths caused by smoking.
They calculated the cost to Scotland was 1.069bn. They said this exceeded the 940 million received in tobacco duty in Scotland.
ASH Scotland chief executive Sheila Duffy said their 'Up in Smoke report' showed "the cost of smoking is too high a price for Scotland to pay".
ASH Scotland said that lost productivity as a result of workers on smoking breaks, absenteeism among smokers and the lost output due to early deaths totalled 692m.
It added that a further 34m was spent cleaning up tobacco-related litter from the streets while the cost of fires caused by smoking in commercial properties was put at 12m.
Simon Clark, director of the smokers' group Forest, said: "Smokers make a huge financial contribution to the economy through tobacco duty and VAT.
"The alleged cost of smoking is based not on facts but on guesstimates and calculations that have little relevance to reality."