Home > Dail Eireann debate. Written answer 227 - Illicit trade [24729/16].

[Oireachtas] Dail Eireann debate. Written answer 227 - Illicit trade [24729/16]. (16 Sep 2016)

227. Deputy Seán Barrett asked the Minister for Finance if he has examined the third illicit trade report produced by Grant Thornton; and his views on the findings regarding alcohol, fuel, pharmaceuticals, tobacco and digital piracy. [24729/16]

Minister for Finance (Deputy Michael Noonan): I am aware of the report on "Illicit Trade in Ireland 2013-2015", published recently by Grant Thornton, which addresses illicit trade in the sectors referred in the Deputy's Question.

I understand that the report looks at the costs associated with illicit trade in those sectors. I would point out, however, that estimating the extent of any illicit activity is inherently problematic and must, therefore, be approached with caution. It follows that, unless a clear and credible methodology is specified for particular estimates of illicit trade and the resulting tax loss, they must be regarded as speculative. I am advised that the Grant Thornton report itself expressly recognises the difficulties involved in estimating reliably the extent of losses incurred as a result of illicit trade in certain of the sectors which it addresses, or provides only very broad estimations of possible loss.

I understand also that the report refers to a number of estimates of the loss to the Exchequer arising from the illicit trade in tobacco products. The extent of this illicit trade is estimated through annual surveys that are carried out for the Revenue Commissioners and the Health Services Executive by Ipsos MRBI. Assuming that the illegal cigarettes consumed displace the equivalent full tax paid quantity of cigarettes, the results of the survey for 2015 indicate that the loss to the Exchequer in excise duty and VAT was in the order of € 192 million. Revenue advise me that they are satisfied that this survey is the best indicator of the extent of the market in illicit cigarettes. This is because of the methodology used and the consistent way in which the survey has been undertaken over a number of years. It is geographically representative and surveys population samples that are statistically robust. In addition, this methodology, in contrast to others such as empty pack surveys, is capable of distinguishing between illicit cigarettes and legal personal imports.

It is, however, accepted by all interested parties that illicit trade in the sectors addressed by the report, and shadow economy activities in general, pose a threat to legitimate and compliant businesses and to consumers, as well as depriving the Government of tax revenues. Tackling the illegal activities in those sectors, and broader shadow economy activities, is therefore a key priority.

Revenue's actions against the illicit tobacco trade include a range of measures to identity 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 and deployment of detection technologies.

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

In the case of alcohol, Revenue's action against illicit trade encompasses the full supply chain for alcohol products and includes measures to combat smuggling, the illicit production of alcohol and the sale or supply of illicit products.

Revenue also acts to detain or seize, at the point of entry to the State, products that are suspected to be illegal or counterfeit medicines. Products detained by Revenue are passed to the Health Products Regulatory Authority, which is the competent authority for such matters, for analysis, identification and any necessary further action.

Revenue works closely, as well, with other agencies in the State, including An Garda Síochána, in acting against illegal activities related to illicit trade. The relevant authorities in the State also work closely with their counterparts in Northern Ireland to target the organised crime groups that are involved in a range of criminal activities, including the kinds of illicit trade addressed in the Grant Thornton report. I believe that this work to tackle cross-jurisdictional organised crime is being supported and facilitated by the establishment, in the framework of "A Fresh Start: the Stormont Agreement and Implementation Plan" of the Joint Agency Task Force, which includes Revenue. There is close cooperation also with the relevant authorities in other jurisdictions, the European Anti-Fraud Office and other international bodies and agencies in the ongoing programmes of action at international level to combat illicit trade.

I am assured by Revenue that action against illicit trade is, and will continue to be, a central element of their work. For my part, I have taken action through the Finance Acts over recent years to ensure that Revenue has all the necessary powers to act against these forms of criminal activity and I am satisfied that there is a robust legal framework in place that allows effective action to be taken against those responsible for such crimes.

Matters relating to digital piracy fall within the remit of my colleague the Minister for Jobs, Enterprise and Innovation.

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