I move: "That the Bill be now read a Second Time."
I am delighted to introduce the Sale of Illicit Goods Bill on Second Stage. In doing so, I wish to acknowledge the input of RAS, the Retailers Against Smuggling organisation, and the report compiled by Grant Thornton on illicit trade in Ireland. I also wish to thank my Fianna Fáil colleagues for allocating the time for this debate.
The smuggling trade in Ireland was previously thought of as a form of cute hoorism, a fairly innocuous activity whereby people, mainly in the Border region, found ways of earning a little extra income. Being from a Border region, I see at first hand the damage that current illicit trade activity does to the livelihood of retailers. This is a no longer just a Border problem, but a nationwide problem with illegal cigarettes, alcohol and fuel ending up for sale on every street of every village, town and city in our country. Unfortunately, smuggling has become a massive illegal criminal activity, causing huge losses in revenue to the State and retailers. In 2009, for example, €50 million worth of contraband cigarettes were confiscated at Greenore Port. That 120 million illegal cigarette haul was the largest ever seized anywhere in Europe.
Currently, there is no deterrent to purchasing smuggled goods as it is not a crime. The aim of the Bill is to deter people from buying illicit alcohol, solid fuel and tobacco by introducing on-the-spot fines for purchasing goods where taxes have not been paid. This is a necessary measure to protect small and not so small Irish retailers. The primary benefit of the legislation is not that it will create a punishable crime, but that a clear message is being sent that one should not purchase these products because one is facilitating criminal gangs by doing so. The level of criminality could be curtailed if purchasers were more aware of how they aid and abet the criminal underworld.
Illicit trade continues to be a huge burden on the Exchequer and on small businesses. In addition to the 20% to 30% of direct turnover retailers are losing, they also miss out on add-on purchases of other products in the store. Some 13% of all packs of cigarettes held in Ireland are illegal, representing a loss to the Exchequer of €229 million in 2017 alone and €1.7 billion between 2010 and 2017. As RAS has said, this is enough to build 8,400 social housing units. Instead, the money goes directly into the hands of criminal gangs. In the case of alcohol, during 2017 the Revenue Commissioners seized 95,021 litres of illicit alcohol with an estimated value of €0.91 million. Total seizures of alcohol in Ireland have increased by 100% and continue to increase yearly. The loss to the economy from 2010 to 2014 alone was €655 million, money that could be spent on our ailing health service rather than lining the pockets of criminal gangs.
On a personal note, I know festival organisers who were approached and offered a lucrative amount of money to sell the empty big brand vodka bottles. Presumably, it was intended to fill them with cheap hooch. We should be mindful that there is also a health issue with illegal alcohol and cigarettes in that we do not have a clue what is in these products. Similarly, the solid fuels are beyond smoky and pollute our environment. With the recent increase in carbon tax in the budget and the smoky coal ban due to be implemented next year, the likelihood of an increase in fuel smuggling over the Border is extremely high.
There have been very few convictions compared with the amounts that have been confiscated. In March 2017 an illegal cigarette factory was discovered in my home county of Louth that was capable of producing 250,000 illicit cigarettes per hour. Two fuel laundering plants were also discovered in Louth. A counterfeit vodka production plant was discovered as well. These discoveries, and the year on year growth in the number of illicit products in the country highlight the importance of the Bill. Brexit has created a political atmosphere that will likely make cross-Border smuggling more lucrative due to a fluctuating sterling and potential tariffs. Extra resources and protections are needed for small legitimate retailers who operate along the Border to ensure there is no increase in smuggled goods entering Ireland.
The Bill ensures that a major gap in the legislation surrounding illicit trade is closed. The next steps are to ensure that retailers and the Revenue Commissioners do not lose yet more money to criminals.
It is alarming news that only one third of the required extra 600 customs officials will be operational next year. Smuggling takes huge volumes of business away from legitimate retailers every year. This problem will only be exacerbated by Brexit.
A 2018 survey conducted by Retailers Against Smuggling found that Border retailers are 63% more concerned about the likely impact Brexit will have on their communities with regard to smuggling than they were this time last year. Year on year, excise increases directly affect retailers' profits by encouraging the purchase of smuggled and illicit goods. At present, the price of a pack of cigarettes is €12.70 when purchased in a responsible retailer’s store. Retailers simply cannot keep up with the €5 packs that are sold by criminal gangs on the streets. We must remember also that this illegal activity is feeding into more serious crime. We can be sure that the criminal gangs involved in the illicit trade of tobacco, alcohol and fuel are also the same gangs involved in drug trafficking. We must stamp out these sources of income into these gangs.
Many people who struggle will look to buy the cheap product, be it cigarettes, fuel or alcohol. They may call me or others the killjoys. They may say that they need to purchase the cheaper product. They must remember, however, a number of issues. Studies have shown that the quality of the product is suspect and is often dangerous and detrimental to health. They need to know they are lining the pockets of criminal gangs. They also need to know that small businesses, which are the lifeblood of communities - ours and theirs - are closing down every day because they cannot compete with this illicit trade.