Home > Joint Committee on Justice, Defence and Equality Debate. Black market: Discussion with National Federation of Retail Newsagents.

[Oireachtas] Joint Committee on Justice, Defence and Equality Debate. Black market: Discussion with National Federation of Retail Newsagents. (13 Mar 2013)

External website: https://www.oireachtas.ie/en/debates/debate/joint_...

Chairman:I thank Mr. Joe Sweeney, district president, Mr. Martin Mulligan, executive member, and Ms Deirdre Drennan of the development executive of the National Federation of Retail Newsagents for their attendance at the committee and thank them for giving of their time to be here. The format for the meeting is that I will invite the representatives to make brief opening remarks for five or six minutes, followed by a question and answer session with Members on the issues raised. 

Before we begin, I draw the attention of all witnesses to the position in regard to privilege. Witnesses are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if witnesses are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence concerned with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or persons or entity by name or in such a way as to make him, her or it identifiable.
I remind members that under the salient rules of the Chair, they should not comment on, criticise or make charges against a person outside the House or an official by name in such a way as to make him, her or it identifiable. I invite Mr. Sweeney to make the opening statement.
Mr. Joe Sweeney:We are the National Federation of Retail Newsagents Ireland and are here to speak about the black market and the illicit trade in tobacco and alcohol.
The illicit trade in cigarettes in Ireland continues to grow. Smuggled cigarettes are on open sale at markets and fairs all over the country. Door to door selling in urban areas is rising rapidly. It is distressing for shop-keepers who pay rates and comply with a multitude of regulations to see an illegal cigarette seller undermining his business without any restraints. The illicit trade is not a small-time, petty criminal's activity.
Last autumn the US Congress published a report, citing its own Department of Homeland Security, which listed the Real IRA alongside Hezbollah, Hamas and the Kurdistan Workers Party, PKK, as global terrorist groups financed through the illicit tobacco trade. Closer to home, the 2012 cross-Border organised crime assessment prepared by the Department of Justice and Equality and the Department of Justice in Northern Ireland in conjunction with An Garda Síochána and the PSNI, stated that dissident republicans are generating significant sums of money from fuel laundering and tobacco smuggling.
According to a recent survey, 29.8% of cigarettes consumed in Ireland had not been taxed here.
We, in NFRN Ireland, want to see fines and deterrents which would be enough to deter illegal trading in tobacco and alcohol.
Almost nobody under the age of 30 is coming into our shops to buy cigarettes, and yet the level of smoking in this age group is almost identical to what it was ten years ago. This is because young people are sourcing their tobacco on the black market, putting cash into the pockets of criminals and subversives.
In the case of illicit alcohol, it is estimated by Retail Ireland that some 42 million litres were consumed in Ireland in 2011. We would like Revenue to produce estimates of the taxes lost in Ireland due to the illicit alcohol trade. We do not have any figures on this, unlike in the case of tobacco.
That is my presentation. NFRN Ireland has some suggestions to put to Government that would enable it combat the illicit trade in those products.
Senator Rónán Mullen:I welcome the representatives of NFRN Ireland and thank them for their submission.
Undoubtedly, the idea of losing Revenue, particularly in the current economic situation, is of major concern to many. Mr. Sweeney's points are well made. It is always in our interests to combat the black market. What does he say to arguments made by respectable groups such as the Irish Heart Foundation, in a submission to the committee, that there is an excessive focus on the issue of smuggling as a means of arguing against increased taxation on tobacco? They argue that there is a proven link between taxation on tobacco and reduced risks and better health outcomes. They also argue that those such as the tobacco companies, but also the retailers, who argue against increases in tax on tobacco continue to raise prices. What does Mr. Sweeney say to those arguments?
Mr. Joe Sweeney:I disagree with many of those points because increasing the price of tobacco, whether it be by taxation or any other means, merely drives business further into the black market. It creates a bigger gap between the retail price in a legitimate outfit and the price on the black market.
We are responsible retailers. We observe the law. We implement regulation on behalf of the Government. How will the Government implement the regulation if it does not control the black market? We are their source of implementing regulation.
We have co-operated with Government for many years. We have implemented age-restrictive regulation. We have banned the sale of cigarettes in tens. We are now subject to a ban on display - we cannot display the product. All of this has contributed to more focus on availability on the black market.
I stated in my opening remarks that we now find that those under the age of 30 are not coming in to our shops to buy tobacco, and yet they are smoking it. In previous years, we had a problem with those under age trying to buy tobacco in our shops. Many of us had a difficult time identifying them, checking their age, etc. In my case, as a retailer in north Dublin, I now never get approached by juveniles for tobacco. They do not need to come to my shop. They can get it so easily and so cheaply.
Deputy Niall Collins:I thank NFRN Ireland for its submission. Recently I attended a briefing in Limerick organised by the retailers at which the tobacco companies and the Revenue customs officials were present, and it was quite informative. They said much of what Mr. Sweeney said here today.
I ask Mr. Sweeney to be a little more prescriptive in how the illegal tobacco trade should be dealt with. It is fine saying there should be more enforcement and more penalties, but one is dealing with Premiership-style criminality in the crime gangs involved. If the State seeks to increase the taxation on tobacco, it is a matter of balance in trying to raise revenue but also not drive more of the market into the hands of those who are peddling the product on the black market. What exactly is NFRN Ireland saying is the best way to deal with it? Could Mr. Sweeney be a little more prescriptive and give a little more detail in terms of what NFRN Ireland is looking for? Rather than merely stating they need more enforcement or more penalties, could he give more detail on that?
Mr. Joe Sweeney:We can put forward a number of suggestions. We feel that over the years not enough people such as ourselves have contributed to the debate and put forward suggestions. NFRN Ireland has a number of suggestion and I will speak about some of them.
Recently, in Switzerland, a new development based on a smart-phone application has been launched. What is probably needed here - we are looking to Government to do this for us - is legislation to allow the Garda and others use this smart-phone application. At present, gardaí cannot do very much if they suspect somebody of being in possession of counterfeit cigarettes but if this smart-phone application were allowed, they would be able to check a packet of cigarettes and the application would tell them instantly whether it was duty paid, whether it was counterfeit. It is based on a technology called Co-identify and at present, it is being rolled out in Switzerland.
I will explain how the application works. A special barcode would be imbedded on the pack at manufacture. So far, the counterfeiters have been able to rapidly copy anything that has been produced, such as the pack. Even the Irish Government tax stamp can be produced in a factory in China and delivered here. With this application, however, the barcode which is called a rolling barcode, embedded in the pack would change every day and it would be very difficult for counterfeiters to keep up with it.
We would also ask that the sale of tobacco be banned completely at markets and fairs in Ireland. It is too easy for illicit traders to sell their product in such places.
We want to see the owners of these sites held responsible for allowing illegal activity take place on the premises. If I allow any illegal activity in my store I will be held responsible immediately and face the consequences. If I am found to have sold tobacco to a person under the age of 18 I will be subject to statutory fines, a possible jail term, the loss of my licence for a period of time and I could go out of business. Illicit traders do not face these consequences. One of our problems is that there is no minimum fine. We must introduce the concept of a minimum fine and Ms Drennan will outline a way in which this could be done.
We suggest, and we are serious about it, that the consumer also takes responsibility. I do not see the difference between possessing counterfeit tobacco and possessing cannabis. If a person is identified as possessing counterfeit cigarettes he or she should face the consequences and should be at least brought to court and charged with the offence.
Ms Deirdre Drennan:To follow from what Mr. Sweeney stated, at present there is no minimum fine for anybody convicted of selling smuggled or counterfeit tobacco. We know of people who have been fined as little as 50 cent. We would like to see an amendment to the Casual Trading Act 1995 to make the penalties in respect of the casual trading of tobacco products as strict as those which apply under section 109 of the Finance Act 2001. Under the Casual Trading Act the fine for a first offence is a paltry €63 and for a second offence the fine is only €317. We would like to see a minimum fine of €10,000. This would act as a more serious deterrent to selling this type of product and would also narrow the price point between legitimate tobacco and contraband and counterfeit tobacco as criminals would have to recover their costs. We would like the committee to consider introducing this minimum fine under section 25 of the Criminal Justice Act 2007 and amending the Finance Act and the Casual Trading Act accordingly….

Repository Staff Only: item control page