Home > Dail Eireann debate. Written answer 149 - Illegal tobacco and fuel trades [1886/16].

[Oireachtas] Dail Eireann debate. Written answer 149 - Illegal tobacco and fuel trades [1886/16]. (19 Jan 2016)

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149. Deputy Michael McGrath asked the Minister for Finance the efforts the Revenue Commissioners and Customs officials are making to clamp down on smuggling of tobacco and fuel; the cost to the State; and if he will make a statement on the matter. [1886/16]


Minister for Finance (Deputy Michael Noonan): The Revenue Commissioners advise me that it is inherently difficult to estimate the extent of any illegal activity with confidence and that it is not possible, therefore, to put a figure on the cost to the Exchequer of fuel fraud. The extent of the illicit trade in cigarettes is estimated, however, through annual surveys of smokers that are carried out for Revenue and the National Tobacco Control Office of the Health Service Executive by Ipsos MRBI. Assuming that the illegal cigarettes consumed displaced the equivalent full tax paid quantity of cigarettes, the results of the 2014 survey indicate that the loss to the Exchequer in excise duty and VAT attributable to the illegal trade was of the order of €214 million.

I am advised also that combatting the illegal tobacco and fuel trades is, and will continue to be, a high priority for Revenue.


Revenue's actions against the illegal tobacco trade include a range of measures to identify and target those who are involved in the supply or sale of illicit products, with a view to seizing those products and prosecuting the persons involved. This multifaceted strategy also includes ongoing analysis of the nature and extent of the problem, development and sharing of intelligence on a national, EU and international basis, use of analytics, deployment of detection technologies and optimising the deployment of resources.


Revenue has also implemented a comprehensive strategy to tackle the illegal fuel trade, based on the introduction of stringent supply chain controls, the implementation from April 2015 of a new fuel marker here and in the UK, and rigorous enforcement action.


In addition, Revenue cooperates extensively with An Garda Síochána in acting against these illicit trades, and the relevant authorities in the State also work closely with their counterparts in Northern Ireland, through cross-border enforcement groups, to target the organised crime groups that are responsible for a large proportion of these forms of criminality. I believe that this work to tackle cross-jurisdictional organised crime will be supported and reinforced by the establishment, in the framework of "A Fresh Start: The Stormont Agreement and Implementation Plan", of the Joint Agency Task Force, which includes the Revenue Commissioners.


Revenue's programmes of action against these criminal activities have achieved notable successes. During 2015, some 68 million illicit cigarettes and 2,364 kilograms of illicit tobacco were seized, and there were 40 and 75 convictions, respectively, for tobacco smuggling and the sale of illicit tobacco products.  In addition, 15 filling stations were closed down and 215,000 litres of fuel were seized during the year, bringing total closures and seizures since 2011 to 149 stations and more than 3 million litres. 31 fuel laundries, where prescribed markers were illegally removed from fuel, were also detected and shut down during that time. The industry view is that the measures implemented have been successful in curtailing fuel fraud. This view is supported by a significant increase in tax revenues from road diesel over recent years. An analysis of long-term consumption trends for road diesel and marked diesel in Ireland undertaken by Revenue also pointed to a significant change in the pattern of consumption following implementation of the anti-fraud measures.


For my part, I have acted to ensure that the Revenue Commissioners have the statutory powers necessary for undertaking this important work.


In the case of tobacco, measures in the Finance Act 2012 clarified the legal basis for Revenue officers to open and examine the contents of postal and courier packets that are reasonably believed to contain untaxed tobacco products. In the Finance Act 2013, I introduced new offence and forfeiture measures relating to the illicit production of tobacco, including offences of keeping materials and equipment for the purpose of illegal tobacco production, and provision for forfeiture of any equipment, materials, or unmanufactured tobacco used for illicit production. The Finance (No. 2) Act 2013 strengthened the obligation of a person suspected of dealing in unstamped tobacco products to provide information to a Revenue officer or a Garda and to present any tobacco products concerned for examination. The measure also allows any bag or other receptacle that is reasonably believed to contain tobacco products that are concerned in an offence to be searched.


In relation to fuel, action was taken to ensure the necessary legislative underpinning for a range of key initiatives, including the strengthening of the licensing regime for auto fuel traders, the introduction of a new licensing regime for marked fuel traders, the putting in place of new requirements for recording and reporting of fuel transactions, and the introduction of the new fuel marker. Revenue's ability to combat fuel fraud was strengthened also by the introduction, in the Finance (No. 2) Act 2013, of a provision making a supplier who is reckless in supplying fuel for a purpose connected with excise fraud liable for duty at the standard rate of tax. In the Finance Act 2014, Revenue's entitlement to refuse or revoke a mineral oil trader's licence was augmented to cover situations including where a trader does not maintain adequate stock management systems and records, or provides false or misleading information.


I am satisfied that, as a result of these initiatives, the current legislative framework provides an effective basis for action by Revenue against fuel and tobacco offences, and I am assured by the Revenue Commissioners that action against such activities will continue to be a central element of their work.

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