Joint Committee on Justice, Defence and Equality díospóireacht -
Wednesday, 13 Mar 2013

Black Market: Discussion with National Federation of Retail Newsagents

Chairman

I thank Mr. Joe Sweeney, district president, Mr. Martin Mulligan, executive member, and Ms Deirdre Drennan of the development executive of the National Federation of Retail Newsagents for their attendance at the committee and thank them for giving of their time to be here. The format for the meeting is that I will invite the representatives to make brief opening remarks for five or six minutes, followed by a question and answer session with Members on the issues raised.

Before we begin, I draw the attention of all witnesses to the position in regard to privilege. Witnesses are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if witnesses are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence concerned with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or persons or entity by name or in such a way as to make him, her or it identifiable.

I remind members that under the salient rules of the Chair, they should not comment on, criticise or make charges against a person outside the House or an official by name in such a way as to make him, her or it identifiable. I invite Mr. Sweeney to make the opening statement.

Mr. Joe Sweeney

We are the National Federation of Retail Newsagents Ireland and are here to speak about the black market and the illicit trade in tobacco and alcohol.

The illicit trade in cigarettes in Ireland continues to grow. Smuggled cigarettes are on open sale at markets and fairs all over the country. Door to door selling in urban areas is rising rapidly. It is distressing for shop-keepers who pay rates and comply with a multitude of regulations to see an illegal cigarette seller undermining his business without any restraints. The illicit trade is not a small-time, petty criminal's activity.

Last autumn the US Congress published a report, citing its own Department of Homeland Security, which listed the Real IRA alongside Hezbollah, Hamas and the Kurdistan Workers Party, PKK, as global terrorist groups financed through the illicit tobacco trade. Closer to home, the 2012 cross-Border organised crime assessment prepared by the Department of Justice and Equality and the Department of Justice in Northern Ireland in conjunction with An Garda Síochána and the PSNI, stated that dissident republicans are generating significant sums of money from fuel laundering and tobacco smuggling.

According to a recent survey, 29.8% of cigarettes consumed in Ireland had not been taxed here.

We, in NFRN Ireland, want to see fines and deterrents which would be enough to deter illegal trading in tobacco and alcohol.

Almost nobody under the age of 30 is coming into our shops to buy cigarettes, and yet the level of smoking in this age group is almost identical to what it was ten years ago. This is because young people are sourcing their tobacco on the black market, putting cash into the pockets of criminals and subversives.

In the case of illicit alcohol, it is estimated by Retail Ireland that some 42 million litres were consumed in Ireland in 2011. We would like Revenue to produce estimates of the taxes lost in Ireland due to the illicit alcohol trade. We do not have any figures on this, unlike in the case of tobacco.

That is my presentation. NFRN Ireland has some suggestions to put to Government that would enable it combat the illicit trade in those products.

Senator Rónán Mullen

I welcome the representatives of NFRN Ireland and thank them for their submission.

Undoubtedly, the idea of losing Revenue, particularly in the current economic situation, is of major concern to many. Mr. Sweeney's points are well made. It is always in our interests to combat the black market. What does he say to arguments made by respectable groups such as the Irish Heart Foundation, in a submission to the committee, that there is an excessive focus on the issue of smuggling as a means of arguing against increased taxation on tobacco? They argue that there is a proven link between taxation on tobacco and reduced risks and better health outcomes. They also argue that those such as the tobacco companies, but also the retailers, who argue against increases in tax on tobacco continue to raise prices. What does Mr. Sweeney say to those arguments?

Mr. Joe Sweeney

I disagree with many of those points because increasing the price of tobacco, whether it be by taxation or any other means, merely drives business further into the black market. It creates a bigger gap between the retail price in a legitimate outfit and the price on the black market.

We are responsible retailers. We observe the law. We implement regulation on behalf of the Government. How will the Government implement the regulation if it does not control the black market? We are their source of implementing regulation.

We have co-operated with Government for many years. We have implemented age-restrictive regulation. We have banned the sale of cigarettes in tens. We are now subject to a ban on display - we cannot display the product. All of this has contributed to more focus on availability on the black market.

I stated in my opening remarks that we now find that those under the age of 30 are not coming in to our shops to buy tobacco, and yet they are smoking it. In previous years, we had a problem with those under age trying to buy tobacco in our shops. Many of us had a difficult time identifying them, checking their age, etc. In my case, as a retailer in north Dublin, I now never get approached by juveniles for tobacco. They do not need to come to my shop. They can get it so easily and so cheaply.

Deputy Niall Collins

I thank NFRN Ireland for its submission. Recently I attended a briefing in Limerick organised by the retailers at which the tobacco companies and the Revenue customs officials were present, and it was quite informative. They said much of what Mr. Sweeney said here today.

I ask Mr. Sweeney to be a little more prescriptive in how the illegal tobacco trade should be dealt with. It is fine saying there should be more enforcement and more penalties, but one is dealing with Premiership-style criminality in the crime gangs involved. If the State seeks to increase the taxation on tobacco, it is a matter of balance in trying to raise revenue but also not drive more of the market into the hands of those who are peddling the product on the black market. What exactly is NFRN Ireland saying is the best way to deal with it? Could Mr. Sweeney be a little more prescriptive and give a little more detail in terms of what NFRN Ireland is looking for? Rather than merely stating they need more enforcement or more penalties, could he give more detail on that?

Mr. Joe Sweeney

We can put forward a number of suggestions. We feel that over the years not enough people such as ourselves have contributed to the debate and put forward suggestions. NFRN Ireland has a number of suggestion and I will speak about some of them.

Recently, in Switzerland, a new development based on a smart-phone application has been launched. What is probably needed here - we are looking to Government to do this for us - is legislation to allow the Garda and others use this smart-phone application. At present, gardaí cannot do very much if they suspect somebody of being in possession of counterfeit cigarettes but if this smart-phone application were allowed, they would be able to check a packet of cigarettes and the application would tell them instantly whether it was duty paid, whether it was counterfeit. It is based on a technology called Codentify and at present, it is being rolled out in Switzerland.

I will explain how the application works. A special barcode would be imbedded on the pack at manufacture. So far, the counterfeiters have been able to rapidly copy anything that has been produced, such as the pack. Even the Irish Government tax stamp can be produced in a factory in China and delivered here. With this application, however, the barcode which is called a rolling barcode, embedded in the pack would change every day and it would be very difficult for counterfeiters to keep up with it.

We would also ask that the sale of tobacco be banned completely at markets and fairs in Ireland. It is too easy for illicit traders to sell their product in such places.

We want to see the owners of these sites held responsible for allowing illegal activity take place on the premises. If I allow any illegal activity in my store I will be held responsible immediately and face the consequences. If I am found to have sold tobacco to a person under the age of 18 I will be subject to statutory fines, a possible jail term, the loss of my licence for a period of time and I could go out of business. Illicit traders do not face these consequences. One of our problems is that there is no minimum fine. We must introduce the concept of a minimum fine and Ms Drennan will outline a way in which this could be done.

We suggest, and we are serious about it, that the consumer also takes responsibility. I do not see the difference between possessing counterfeit tobacco and possessing cannabis. If a person is identified as possessing counterfeit cigarettes he or she should face the consequences and should be at least brought to court and charged with the offence.

Ms Deirdre Drennan

To follow from what Mr. Sweeney stated, at present there is no minimum fine for anybody convicted of selling smuggled or counterfeit tobacco. We know of people who have been fined as little as 50 cent. We would like to see an amendment to the Casual Trading Act 1995 to make the penalties in respect of the casual trading of tobacco products as strict as those which apply under section 109 of the Finance Act 2001. Under the Casual Trading Act the fine for a first offence is a paltry €63 and for a second offence the fine is only €317. We would like to see a minimum fine of €10,000. This would act as a more serious deterrent to selling this type of product and would also narrow the price point between legitimate tobacco and contraband and counterfeit tobacco as criminals would have to recover their costs. We would like the committee to consider introducing this minimum fine under section 25 of the Criminal Justice Act 2007 and amending the Finance Act and the Casual Trading Act accordingly.

Chairman

I can already see Deputy Collins writing the legislation.

Mr. Joe Sweeney

Mr. Mulligan has some statistics on fines.

Mr. Martin Mulligan

The highest incidence of non-Irish duty paid cigarettes was in Waterford at 44.5% followed by Kildare at 41%. Three counties had no convictions for tobacco offences and Kildare was one of them along with Sligo and Roscommon. I am from the heart of the midlands and I see people trading openly and going door to door with tobacco. It is amazing that these counties have had no convictions.

Ms Deirdre Drennan

We want this to be treated as a serious crime. Under existing legislation it is not a serious crime; it is a crime with very low consequences. The results of surveys such as that mentioned by Mr. Mulligan and the fines imposed on people convicted trivialise it as a crime.

Mr. Joe Sweeney

With regard to deterrents, the country lacks port scanners. We only have two mobile port scanners, and to be honest the criminals are just playing a game with them because they know where they are and when they will be moved. Port scanners cost a lot of money but the federation will assist in their purchase. The smart phone app would not cost the Government a penny because the National Federation of Retail Newsagents will pay for it. It is not a big amount of money, which may be surprising. An app can be produced for €10,000 or less.

Chairman

Will Mr. Sweeney explain how a port scanner works?

Mr. Joe Sweeney

A port scanner is like a 40 foot truck container which can be moved from port to port. It is opened up and trucks drive through it to be scanned. A number of seizures have been made in this way. It is a very successful operation but we need one at every port in the country so we need eight or ten of them. It is a no-brainer as far as I can see because they would save the Government so much money in lost revenue. The amount of revenue lost to the Government through the illicit tobacco trade is approaching €1 billion.

Deputy Pádraig Mac Lochlainn

I thank the witnesses for their presentation and I agree with their recommendations. We have tried to increase taxation on packets of cigarettes and put the revenue towards the health system and the consequences of an addiction to nicotine and cigarette smoking. Huge progress has been made internationally in this battle, particularly in recent decades. This trade fundamentally undermines this and makes a mockery of what we are trying to do. Anything that can be done to increase the armoury of An Garda Síochána and the Revenue to tackle this must be done. I must commend the witnesses on their offer to contribute financially towards this. It would be very welcome. Have the witnesses engaged with the Minister, Deputy Alan Shatter, on these matters? Have they made a submission on these very solid and practical proposals?

As somebody would describe himself as an Irish republican, anybody involved in diesel laundering or cigarette smuggling does not deserve the name republican in any way shape or form. It is up to themselves if they want to call themselves republican dissidents, but they are not republicans. A republican is of the people and acts in the interests of the people, and they do not act in either. They are criminals and the Garda Síochána and the PSNI should be given every bit of armoury to track them down and take them out of the equation.

Unfortunately in many European countries and other places overseas one can purchase large numbers of cigarettes and take them home. What do the witnesses think of people filling their suitcases with cigarettes and bringing them home and taking their own initiative? What can we do to tackle this? The witnesses have made a superb presentation and I cannot disagree with anything they have said. I would like to think the committee will do all it can to assist them in their endeavours. The issue they are raising is making a mockery of what we are supposed to be trying to achieve. Well done.

Ms Deirdre Drennan

We have approached Minister of State, Deputy Perry, and we have met him on a number of occasions to discuss in detail the content of the presentation we have made today.

We have discussed the application with him in particular. We would be delighted to meet the Minister for Justice and Equality, Deputy Shatter, on any occasion. If the committee could help us to achieve that, we would be very grateful.

As regards cigarettes coming in from foreign holidays, the legislation as currently framed makes it so easy to bring in thousands of cigarettes. One can sail through the airport and claim they are for personal consumption or that they were bought for friends or relations We think the application could help to deter proxy sales because those cigarettes would then have to be sold on somewhere. If they are sold at open fairs or markets and are in locations with which we are all familiar, they are blatantly sold. If gardaí have an application on a smart phone, they can approach the person once they witness the sale and can then implement a prosecution. The application would help with that.

Senator Martin Conway

I should declare an interest in that I am retailer. I may even be a member of the National Federation of Retail Newsagents, but I am not sure. Ms Drennan's presentation was remarkable. We have had a lot of presentations at this committee since I joined it two years ago. The contents were remarkable, as was the offer on the table. I presume Ms Drennan has costed these port-scanners and applications. I am glad she is in a position to do that and I am sure she will be greeted with an open door.

I would not necessarily agree with her conclusion that it is those over 30 who purchase cigarettes in shops. I am not sure if she is familiar with the work being undertaken by Senator John Crown. He wants cigarettes to be banned completely in this country by 2030. I concur with that position. It breaks my heart to see the number of people smoking and the amount of cigarettes being purchased legally and illegally. It is costing this country billions in health care provision annually. We should eliminate smuggling. All elements in society should work diligently to encourage people to stop smoking.

What does Ms Drennan think of cigarette companies selling packs of 23 at a cheaper price per cigarette than a packet of 20? That is promoting and discounting the sale of cigarettes. What does Ms Drennan think of incentives being offered to retailers, particularly staff in retail shops? If the sale of a certain product is increased, the staff receive vouchers. I think that is horrendous. When cigarette companies made my management aware of that, they were almost run out of the place.

We may talk about illegal cigarettes, which is an issue, but there is an overall societal responsibility. I would like to hear Ms Drennan's thoughts on that.

Mr. Joe Sweeney

With regard to packets of 23 cigarettes, manufacturers would say they are doing that in an effort to close the price gap between illicit and legal sales. I do not have an opinion on it, as such.

I do not agree with offering vouchers to promote products. I think it is wrong and our organisation is not in favour of it.

What was the other question?

Ms Deirdre Drennan

The fact that tobacco is a dangerous product.

Senator Martin Conway

What is the organisation's view on the health implications of cigarette smoking?

Chairman

We are getting away from our brief now. That is a health issue.

Senator Martin Conway

I am aware of that, Chairman, but I would like to hear their thoughts because they are presenting to the committee.

Mr. Joe Sweeney

As an organisation, we instruct our members to adhere to the law and any regulations passed down from Government. In speaking to retailers, I am happy to say they are aware of the health issues and their responsibility in that area.

With regard to Senator Crown's effort to ban tobacco altogether, our organisation is working on the theory that tobacco will eventually be banned from sale completely. We are working towards the idea that the sale of tobacco will be banned, so we will have to replace it with some other categories which will help us to stay in business and remain profitable.

At the moment, it is true that tobacco sales account on average for 30% of retailers' and newsagents' business. To stay in business, it is almost a vital part of a retailers' business at the moment. Currently, it is a legal product and we want the Government to ensure it is sold through our legitimate sources. That is the only way they can fully implement the health regulations.

Ms Deirdre Drennan

To respond to Senator Conway's question, the federation is not a pro-smoking organisation. We are here to promote the sale of a legal product so that informed adults can make an educated choice as opposed to having minors buying something illegal from a criminal.

The EU tobacco product directive is currently going through the European Parliament. One of the measures in that legislation is section 3.7 which refers to products containing nicotine. It does not specifically say electronic cigarettes, but that is what it is referring to. One of the proposals in that section is that electronic cigarettes be moved out of newsagents and convenience stores into pharmacies or health shops. We feel that would be a short-sighted measure from the health lobby's viewpoint because products containing nicotine are a weaning tool. Nobody began smoking by using an electronic cigarette. If we want people to give up cigarettes, the alternative should be beside the traditional because it is largely an impulse purchase. It should be as readily available as it possibly can be. If it is put in a different building, people will not move up the street to get it. There will be shorter trading hours as well. I see the Deputy's point, but if he wants to do that, there should be alternatives to support it. That tobacco legislation goes the opposite way, however, making it more difficult to wean oneself off.

Deputy Anne Ferris

I thank the deputation for coming in today. Smuggling is a problem and I have spoken to some of the witnesses before about it. I can see where the problem is for retailers, particularly small ones. They are having a tough enough time competing against larger outlets, particularly on main streets in small towns and villages. Ms Drennan mentioned the ban on the display of cigarettes, but I think that is a good idea. I have to confess that, as a smoker myself, I am one of the voices for the small number of smokers who are left.

Senator Martin Conway

She is trying to give up, though.

Deputy Anne Ferris

I am always trying to give them up.

At the same time, however, I work closely with the Irish Heart Foundation and the Irish Cancer Society because I am of an age to know what damage they are doing and how many people they are killing. All members are acquainted with people who have died as a result of smoking. The point about customs trying to go after the people who are smuggling is well made and more resources should be put into Customs and Excise. Moreover, I had not realised the fines were so small, particularly for the first time but even for the second time.

Ms Deirdre Drennan

Yes.

Deputy Anne Ferris

That is outrageous and such fines certainly should be bigger for anyone caught selling cigarettes illegally.

I wish to ask Ms Drennan one question. She mentioned the question of people going on holidays and bringing back cigarettes but is it not the case that one can only bring back 200 cigarettes or one must pay the customs duty if one is caught at the airport? While I believe Ms Drennan stated that people bring back 1,000 cigarettes and sell them on or whatever, I do not believe this to be the case. Second, I seek the witnesses' comments regarding the figures from the United Kingdom. As they probably are aware, the level of cigarette smuggling there has fallen from 21% in 2001 to 9% in 2011. The joint committee got the figures showing that despite the price of the cigarettes having risen over that ten-year period, the rate of smuggling decreased. This runs somewhat contrary to the argument the witnesses have been making and I invite them to tease out this point. However, I understand the problems they are experiencing. The black market is absolutely illegal and wrong. It constitutes unfair competition to the retailers represented by the witnesses and something must be done in this regard.

Chairman

Two questions have been asked. The first concerns the number of cigarettes people on holidays can bring in from abroad and the second is on the fall in the United Kingdom figures.

Mr. Joe Sweeney

The problem with this is it is a very grey area.

Chairman

Which is a grey area?

Mr. Joe Sweeney

The quantity of cigarettes that people may bring in from abroad. While there is a law in place, it does not appear to be adhered to. It appears to be discretionary on the part of customs at the airport as to whether the cigarettes are for people's own use or whatever. As for when someone states they are for his or her own use, there was a case in which a girl was caught bringing in a large quantity of cigarettes. Customs and Excise and Revenue built up a very strong case against her and-----

Chairman

We do not wish to identify anyone here at all.

Mr. Joe Sweeney

No. They took her to court and when the judge asked her the reason for her actions, she simply replied that her boyfriend had made her do it. The judge then fined her 50 cent. One of the biggest problems is that when cases are brought to court-----

Chairman

Sorry, can you tell the joint committee what is the actual legal limit as to the number of cigarettes one can bring in? I think that was the question. Is 200 cigarettes the limit?

Ms Deirdre Drennan

It is 200 cigarettes for personal consumption but one can bring back more, as one can bring back presents. One might have 200 for oneself, 200 for one's friend and 200 for someone else.

Deputy Anne Ferris

I do not believe that is the case because the sky shopping magazine on Aer Lingus flights states clearly that 200 cigarettes per person can be brought in. This always has been my understanding.

Senator Martin Conway

The limit should be 19 cigarettes, that is, a single packet with a cigarette missing. In other words, one can only bring the packet one actually is smoking and the rest should be banned.

Deputy Anne Ferris

One is not allowed to smoke on the aeroplane.

Chairman

The other question was on the fall recorded in the United Kingdom's statistics.

Mr. Joe Sweeney

The United Kingdom figures can be widely disputed for the simple reason that, as I stated, in our own country we have eight ports and an insufficient number of scanners. They have far more in the United Kingdom and I do not believe they have complete figures in this regard. For instance, only the other day a single seizure in the United Kingdom yielded 30 million cigarettes. I do not have to hand the figures in the joint committee's possession but I strongly reject them.

Deputy Anne Ferris

Can Mr. Sweeney indicate where the cigarettes are coming from in the main?

Mr. Joe Sweeney

Most of the counterfeit cigarettes are coming from the Far East. For instance, we have discovered there are illegal factories in China, which are built underground. They are rat-infested and we have seen secretly filmed pictures of them. There is no standard of hygiene, safety or anything similar. My shop is in Deputy Finian McGrath's constituency and one particular cigarette brand in that district, which is the biggest selling cigarette brand in Dublin, is being specially manufactured for delivery to Ireland for that market. Other routes come from Eastern Europe and alongside counterfeit cigarettes, there also are what we call "illicit whites". Such cigarettes are properly manufactured in a legitimate factory but are taken through routes via countries in Africa and so on, in which low tax regimes are in operation, and are then brought into this country and distributed. Many of the brands in this category would not be familiar to people here.

Deputy Anne Ferris

As one obviously would not go to so much trouble unless it was highly lucrative, it is a huge problem.

Ms Deirdre Drennan

Yes, it is.

Mr. Joe Sweeney

I will make one point in this regard. The cigarettes to which I referred that are being brought in from the likes of China are being landed in Ireland at a cost of approximately 20 cent a packet. Consequently, one can see where the illegal organisations are making big money.

Chairman

For how much are such cigarettes selling?

Mr. Joe Sweeney

They are selling for €4.50 on average per packet. Members can see why it is such an easy business. The penalties are just nonsense, the product is easy to handle and can be distributed in small quantities. People are going around the streets and door-to-door with a couple of packets in a bag and are offering them for sale.

Chairman

Is Mr. Sweeney saying there is a mark-up of €4.30 per packet?

Mr. Joe Sweeney

Yes.

Chairman

What is the mark-up for retailers who pay tax?

Mr. Joe Sweeney

On a packet of cigarettes, which has an average price of €9.20, the margin is approximately 8%.

Chairman

I understand the State gets about 76% of the cost. What does that 8% work out to be in monetary terms?

Mr. Joe Sweeney

It is less than a euro.

Chairman

Consequently, they are making €4.30 in the black market, while the retailers are making one euro in profit per packet.

Mr. Joe Sweeney

Yes, and that is only for a person who buys direct from a supplier here. Many other traders must go through wholesalers and their margin is approximately half that.

Ms Deirdre Drennan

Moreover, that does not allow from licences, labour costs, overheads and so on.

Deputy Anne Ferris

May I ask one last question?

Chairman

The Deputy may ask one final question, as Deputy Finian McGrath has been waiting to contribute.

Deputy Anne Ferris

I thank the Chairman for his indulgence, which I appreciate. Are the witnesses aware of retailers in Ireland that are taking in such illegal cigarettes and selling them? I have heard anecdotally that there are shops in certain parts of the country in which one can buy the cigarettes.

Mr. Joe Sweeney

The Office of Tobacco Control is responsible for implementing the regulation and it franchises that out to the HSE. The HSE's own survey of registered and licensed retailers indicates they are 98% compliant. Our organisation agrees with that because we carry out our own survey. The Deputy is correct in stating that cigarettes are available in shops. They are available in chip shops and in a number of different outlets under the counter. These are known to those who purchase counterfeit cigarettes and they are available in a number of shops that are run and operated by foreign individuals.

We know this because it has been reported to us as well.

Deputy Anne Ferris

I am talking about cigarettes which are being brought into shops that are sold for €9.20 as a normal packet of cigarettes that one would not know are counterfeit.

Mr. Joe Sweeney

That is possible. Customs have inspectors who regularly go to stores to check. They came to my shop on two occasions. They have the right to walk into one’s shop and check one’s stock in the unit and at the back of the store. It is their business to determine such information. Personally, I am not aware of any retailer who is doing that.

Ms Deirdre Drennan

Nor is the organisation.

Deputy Finian McGrath

I apologise, as I was delayed at another meeting. I welcome Mr. Sweeney, Mr. Mulligan and Ms Drennan and thank them for their submission. I wish to focus on the illicit trade in tobacco. I disagree with some of my colleagues. The submission relates, first, to the preservation of jobs in the retail sector and, second, to how we can improve the amount of tax we contribute to the Exchequer. That is the key issue in terms of the argument put forward by the witnesses. Having examined the issue and as a smoker, I am strongly supportive of the proposed solutions. I am aware of what is happening on the ground.

Senator Martin Conway said that 76% of what we pay for a packet of cigarettes goes straight to tax. People such as Senator Conway lecture us on costing the State money but we give approximately €1.2 billion every year in taxation to the Exchequer. A total of 29% of the population smoke. That is the reality and there is a market for those who wish to smoke. Does the federation want to regulate it and make it a professional service or does it want smoking to become an illegal service? That is the bottom line as far as I am concerned. In the past decade we spent hundreds of millions of euro, yet 29% of the population still smokes, as was the case ten years ago. One could ask where the money went and whether the approach worked. We must examine other policies. However, that is a health debate. I am speaking about jobs in this context.

Chairman

We are interested in criminality more than jobs.

Deputy Finian McGrath

I will deal with that issue as well. I strongly support the federation’s submission because I know the reality on the ground. One issue to which reference has been made is illegal cigarettes and smuggling. However, reference has not been made to the fact that some of the serious drugs gangs have moved from cocaine to cigarette smuggling. Armed criminals are involved. It appears that more money can be made from cigarettes than cocaine or heroin.

People are selling illegal cigarettes in the poorest parts of Dublin city. The local shopkeeper on the corner is being hammered once again. That is the economic reality. The illegal cigarette trade is dangerous. As Members of the Oireachtas we must examine the issue as it is getting out of control. We must ensure that regulation is up to date. Newsagents are implementing the regulations. From talking to people in the industry, the majority of retailers – 99.5% of retailers - and those who sell cigarettes do so legitimately and are above board. It is people outside the sector who are the problem. If the committee does not act we will have a serious problem. We regularly speak about job creation and job protection. We must support small businesses.

I fully agree with the point about electronic cigarettes. Efforts are being made to try to get people off cigarettes. I sometimes use them myself when I am trying to give up cigarettes. I go on a health binge every now and again. I would like to be able to buy electronic cigarettes in my local shop or pub rather than having to go to a chemist. To be honest, I would not go near a chemist unless I was dying with the flu or had a major health issue. I would not go there to buy an electronic cigarette. It is time we stopped making it difficult for people to give up cigarettes.

Holiday cigarettes are a significant issue. Deputy Ferris is correct about 200 cigarettes per person being allowed. Most people I know in the Border community come back with up to 1,000 cigarettes. Whatever they do, they seem to get through. We must introduce stronger penalties and ensure that legitimate business which is regulated and supervised and that makes a major contribution to the Exchequer is supported. That is what is important in the debate.

Chairman

As Deputy Finian McGrath suggested, we-----

Deputy Finian McGrath

Apologies for being late. I may have repeated something that has already been said.

Chairman

That is fine. Members are very busy. There has been cross-House support from all parties and Independent Members on what the witnesses have proposed. That is why we were anxious to invite them in today to hear what they had to say.

Mr. Martin Mulligan

When the newsagents sell a packet of cigarettes, the smugglers sell a carton. They sell at ten times the rate of retailers. They make the point that what costs €98 in the shop will cost someone only €40 or €45. They sell cigarettes by the carton and they are delivered direct to people’s homes.

Chairman

I propose that we will reflect on the issue prior to our next meeting and discuss it then to see what action we might take. Is that agreed? Agreed.

I have one or two questions for the witnesses. Point No. 5 in the submission relates to the federation's call for a minimum pricing for alcohol. Could someone expand on the point please because we are interested in the issue from a public order point of view? We are interested in the anti-social behaviour aspects of the abuse of alcohol.

Mr. Martin Mulligan

I would like to see below-cost selling banned. The multiples use below-cost selling to attract people and increase the foot-fall in shops. The measure is being used for the wrong reasons. That was not possible prior to the abolition of the groceries order. Multiples are selling at below cost and they are able to reclaim the VAT. They have the full invoice at the high rate and they get the rebate on the below-cost sale. The Exchequer is contributing 23% of the VAT element towards the cost of below-cost selling.

Chairman

The cost is one element. The federation has called for action in that regard. However, we are interested in anti-social behaviour associated with alcohol abuse and misuse. Alcohol is available in every newsagent and garage. One sees cheap alcohol stacked high. Do the witnesses have a view on the issue? It has been proposed, for instance, that alcohol would be served at a separate till in a separate part of a shop unconnected with groceries. What is the view of the witnesses on that?

Mr. Joe Sweeney

I do not sell alcohol but I sell water and I have to charge more for it than is charged by the supermarkets for alcohol. On the segregation of the licensing, one of the problems is that many small retailers would not be able to afford the high cost of implementing such a change. What would happen is that one would turn convenience stores into off-licences with grocery instead of grocery shops with an off-licence. It would enormously increase the cost of doing business for small retailers. It would not be that much of an issue for multiples and large stores because of the space available to them and the profits they make.

Ms Deirdre Drennan

To add to Mr. Joe Sweeney's point, the way the proposal is written it would fit very well with a large supermarket because they all have aisles. There is an aisle for the off-licence and they could put a till on either end of it, whereas an independent newsagent or convenience store owner would have to put a shop within a shop, which would make it cumbersome for consumers. If I go to a shop on a Friday night and want to buy a pizza and a bottle of wine, I will have to go to one till with the pizza and another till with the bottle of wine. That is awkward and it is not getting to the root of the problem. The problem is that people can get too much drink too cheaply, not where the till is located in the store.

There is no evidence to suggest that any independent retailer or convenience store owner has in any way contributed to anti-social behaviour.

Many of them, including Mr. Sweeney and Mr. Mulligan, are parents who are involved in their respective local communities and do not want to encourage any kind of anti-social behaviour. This issue ties in with the point we made on tobacco. We want to educate people to make informed, responsible choices. Our objective is the creation of a level playing field that will allow independent retailers to compete with the multiples. Unit pricing would encourage such a development.

Chairman

I thank our guests for their interesting and valuable contributions on what is a complex matter. The points they raised will be discussed at our next meeting and following our considerations, the joint committee will write to a number of Ministers on the matter.

Senator Martin Conway

I ask the Chairman to arrange a meeting with the Minister for Justice and Equality.

Chairman

That matter will be discussed at our next meeting. The time of our next meeting has yet to be agreed as it depends on the Dáil schedule and other matters.

The joint committee adjourned at 3.20 p.m. until Wednesday, 20 March 2013.