Tuesday, 1 October 2019

Questions (134)

Declan Breathnach


134. Deputy Declan Breathnach asked the Minister for Finance if his attention has been drawn to the fact that due to differences in tax policies on both sides of the Border, a truckload of coal is €2,217 more expensive here than in Northern Ireland; if his attention has been further drawn to the fact that this price differential will increase further post-Brexit; the actions being taken to prevent smuggling of solid fuel across the Border; and if he will make a statement on the matter. [39408/19]

View answer

Written answers (Question to Finance)

I am assuming that the Deputy, when referring to solid fuel smuggling, is enquiring about the movement of solid fuel into the State from Northern Ireland in the context of Solid Fuel Carbon Tax (SFCT). SFCT is an excise duty that applies to coal and peat when first supplied in the State for use as a fuel. Neither the movement of solid fuel into the State nor the physical presence of solid fuel in the State generate a liability to SFCT. Therefore, there is no smuggling offence, in terms of evasion of SFCT, attaching to coal coming into the State from Northern Ireland.

European Union Single Market constraints preclude the use of any cross-border controls in relation to the movement of solid fuel into the State from other Member States. Therefore, Revenue has no authority to stop vehicles and physically inspect loads of solid fuel entering the State from Northern Ireland. Similarly, the transportation or possession of solid fuel that originated in Northern Ireland are not, in themselves, Revenue offences and Revenue's officers have no authority to challenge such transportation or possession. 

In the event of a no-deal Brexit, the UK will be come a third country and will be outside of the EU’s Single Market and Customs Union.  Any imports of products from a third country, including the UK, will be subject to EU customs requirements.  The exact implications of this for trade and customs compliance between Ireland and Northern Ireland are currently the subject of discussions with the EU Commission.

Currently in Northern Ireland, there is no carbon tax on coal and solid fuel environmental standards are lower than in the State. These factors combined with currency fluctuations and Northern Ireland’s lower VAT rate on solid fuel can give rise to significant price differentials between the two jurisdictions.

As I and my predecessor have pointed out before, the regulatory regime covering the marketing, sale, distribution and burning of solid fuels in the State is operated by the Department of Communications, Climate Action and Environment and is enforced by local authorities who have powers to inspect premises and vehicles being used for the sale and distribution of solid fuel, collect samples of coal to check for adherence to environmental standards and to prosecute traders involved in selling coal that does not meet these standards. The Regulations also provide for the establishment of a register of coal suppliers by the Environmental Protection Agency.

I am advised that Revenue is in contact with the Department of Communications, Climate Action and Environment to discuss the effectiveness of the regulatory regime for solid fuel and to explore how Revenue could support the Department to improve matters in light of continuing concerns that solid fuel sourced from Northern Ireland is getting onto the market here. I understand that contacts are ongoing with a view to undertaking a number of joint operations and to explore the scope for follow up action by Revenue in relation to persons found to be in breach of environmental regulations.