Dáil Éireann Debate, Wednesday - 18 April 2012
164 Deputy Simon Harris asked the Minister for Finance the amount he estimates is lost in revenue to the Irish Exchequer through the illegal tobacco trade here; the estimated loss in each of the years from 2005 to 2011; the most recent studies or data available to him on this issue; and if he will make a statement on the matter. [18489/12]
View answerI am informed by the Revenue Commissioners, who are responsible for the collection of tobacco products tax, and for tackling the illicit trade in cigarettes and tobacco, that there is no internationally recognised method for precisely determining the amount of tax lost as a result of the illicit trade in cigarettes. However, a survey commissioned by Revenue and the Office of Tobacco Control in 2009 estimated that 20% of cigarettes consumed in the State had not been taxed in this jurisdiction. This figure was further broken down as 14% illicit product and 6% legally imported by passengers arriving into the State from other jurisdictions. A similar survey in the last quarter of 2010 confirmed these estimates. A further survey has now been completed and the results will be published shortly. Based on the estimate of 14%, the loss to the exchequer from illicit cigarette consumption during 2009 and 2010 would be in the region of €250m (excise duty + VAT), per year. The Revenue Commissioners inform me that Revenue loss estimates are not available for the period 2005 to 2008 as there were no such surveys commissioned in respect of those years.
I am aware of a number of other studies on the extent of the consumption of illicit cigarettes in Ireland, including those conducted by or on behalf of KPMG, the Irish Tobacco Manufacturers Advisory Committee (ITMAC) and the Irish Heart Foundation. Revenue has assured me that they are confident that the findings of the annual surveys, which are conducted independently by a third party market research company on behalf of both Revenue and the Office of Tobacco Control (now the National Tobacco Control Office) are robust. These surveys specifically differentiate between illicit cigarettes and legal non — Irish tax paid cigarettes.
165 Deputy Simon Harris asked the Minister for Finance if he will establish an inter-departmental committee to develop a national strategy to tackle the illicit tobacco trade and monitor its implementation; if such an inter-departmental committee has ever been established on this issue before through his Department; if so, if he will provide an update on its work programme and outcomes; and if he will make a statement on the matter. [18490/12]
View answerThe Deputy will be aware that the Revenue Commissioners are responsible for the collection of tobacco products tax, and for tackling the illicit trade in cigarettes and tobacco. The Commissioners inform me that they regard the tackling of the illicit tobacco trade as a high priority area. The strategy employed by Revenue to tackle this illicit trade is multi-faceted. It includes ongoing analysis of the nature and extent of the problem, developing and sharing intelligence on a national, EU and international basis, ongoing review of operational policies, development of analytics and detection technologies, optimum deployment of resources at point of importation and inland, in order to intercept the contraband product and to prosecute those involved. Interception at the point of importation is achieved through a combination of risk analysis, profiling, intelligence, and the screening of cargo, vehicles, baggage and postal packages. Revenue enforcement officers also target this illicit trade at the post-importation level by carrying out intelligence-based operations and random checks at retail outlets, markets and private and commercial premises. In July 2010, Revenue launched a series of nationwide tobacco ‘blitz'-type operations, which concentrated additional Revenue resources at ports, airports and at various inland retail points, including markets for the purpose of identifying illicit tobacco products. To date, Revenue has conducted nine such national tobacco blitz operations resulting in the seizure of 34.6m cigarettes and 1,715 kgs of tobacco.
Revenue carries out regular multi-agency operations, particularly in relation to large maritime importations and in checks at inland markets and also works closely with the European Anti-Fraud Office, OLAF, in their efforts at tackling the illicit sale of tobacco at an international level. Revenue also provides, and receives, intelligence from other Customs Administrations. This international cooperation, and sharing of intelligence and expertise plays an important role in combating illegal tobacco smuggling on the global level.
In 2011, a total of 109.1m cigarettes with a retail value of €45.95m and 11,159 kgs of tobacco with a retail value of €4m were seized by Revenue. In addition to this Revenue obtained one hundred and three convictions relating to cigarette smuggling, with fines of €136,300 imposed and thirty-one custodial sentences, of which twenty-one were suspended. There were a further fifty-seven convictions relating to the sale of unstamped tobacco products with fines of €115,850 imposed and fourteen custodial sentences, of which seven were suspended. The Revenue Commissioners have established a high level internal group, chaired at Commissioner level, to examine the risks related to tobacco products tax evasion and to oversee and optimise the detection of contraband and counterfeit tobacco products. This group has promoted a number of initiatives aimed at counteracting the illicit trade in tobacco. These include the adoption of a comprehensive tobacco strategy, which is underpinned by annual action plans. This 3-year (2011-2013) strategy, which is published on Revenue's website www.revenue.ie, includes a number of programmes, which are designed to complement each other in targeting the supply and demand sides of the market for contraband tobacco in Ireland.
Revenue's strategic level plans include the taking of steps to ensure that the legitimate trade remains compliant, delivering more effective and visible interventions through enhanced capability and better deployment of its resources, further development of cooperation and intelligence sharing at organisational, national and international level, a commitment to prosecute all serious cases of tobacco tax evasion and a focus, in partnership with other Government agencies, on reducing the demand for contraband tobacco.
Revenue works closely with the legitimate tobacco industry, including individual manufacturers and ITMAC, to identify current trends and trading patterns with a view to identifying illicit cigarettes on sale in the State. Periodic meetings are held between ITMAC and representatives from the three Revenue Divisions involved in policy, collection and enforcement of tobacco taxes. There is also close co-operation and sharing of information between Revenue and the Office of Tobacco Control, which is an office of the Department of Health. Revenue also works closely with An Garda Síochana through established and effective channels of communication and joins forces with them in multi-agency operations, where appropriate.
Legally binding agreements have been signed between the European Commission and member states (including Ireland) on the one hand and the four major global tobacco manufacturers on the other, with the objective of instituting formal cooperation arrangements to combat cigarette and tobacco smuggling. The manufacturers include Philip Morris International (PMI), Japan Tobacco International (JTI), British American Tobacco (BAT) and Imperial Tobacco Ltd. (ITL). The agreements include the provision of enhanced support to European law enforcement bodies in the battle against the illegal trade in tobacco products. This support also includes the testing on request of selected seized tobacco products to establish whether they are genuine or counterfeit. Under these agreements, the four tobacco manufacturers appear before representatives of the European Commission and the member states on an annual basis to report on the progress of the agreed cooperation commitments.
I am satisfied with the extensive interaction, communication and co-operation already undertaken by Revenue in relation to tobacco smuggling and I am also satisfied that Revenue is willing to pursue additional worthwhile measures to tackle the illicit tobacco trade. Nevertheless, I will ask my officials to consider whether the proposed committee would add in practice to the fight against tobacco smuggling.
