Dáil Éireann Debate, Tuesday - 18 September 2012
193. Deputy Michael Healy-Rae asked the Minister for Finance in view of his commitment to increase the penalty for tobacco smuggling and provide robust protection measures to counteract such smuggling, and given that so far this has not happened and the illegal tobacco problem here is growing, his plans to deal with this problem; and if he will make a statement on the matter. [37645/12]
Amharc ar fhreagra232. Deputy Michael Healy-Rae asked the Minister for Finance in view of the efforts being made to raise revenue and that the combined loss to the Irish Government in tobacco, excise and VAT over the past two years has been €1 billion, his plans to tackle this massive loss; and if he will make a statement on the matter. [37644/12]
Amharc ar fhreagraI propose to take Questions Nos. 193 and 232 together.
I am informed by the Revenue Commissioners, who have responsibility for tobacco products tax, that tackling the illicit trade in tobacco is a priority for them. I am sure the Deputy will appreciate that it is extremely difficult to estimate the loss to the Exchequer which results from shadow economy activity and that claims about the extent of this activity and the associated tax loss must be treated with caution unless supported by credible analysis. Research commissioned by Revenue and the Office of Tobacco Control in 2010 estimated that 14% of cigarettes consumed in the State were illicit product, at a cost to the exchequer of €250 million in excise and VAT annually, assuming that in the absence of illicit cigarettes, smokers would smoke the same quantity of tax paid cigarettes.
In responding to the illicit cigarette problem, Revenue has adopted a comprehensive strategy that includes a range of programmes including border and inland operations, co-operation and intelligence sharing at organisational, national and international level together with ongoing investigation and prosecution of all serious cases of tobacco tax evasion. In the eight months to end-August 2012, 66.8m cigarettes with a retail value of €30.2m and 2,706 kg of tobacco with a retail value of €1m have been seized by Revenue. In addition, Revenue obtained thirty-eight convictions relating to cigarette smuggling, with fines of €63,750 imposed together with eighteen custodial sentences, four of which were suspended, and two community service orders. There were a further forty-eight convictions relating to the sale of unstamped tobacco products. Fines of €84,200 were imposed in these cases, in addition to seventeen custodial sentences, ten of which were suspended, together with one community service order.
In 2011, Revenue seized a total of 109.1m cigarettes with a retail value of €45.95m and 11,158 kgs of tobacco with a retail value of €4m. They also obtained one hundred and one 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.
In relation to penalties, I am informed that persons convicted of indictable excise offences, including evasion of excise duty and dealing in unstamped tobacco products, are liable to a fine of up to €126,970. This amount was increased from €12,695 in 2010. In the case of evasion of excise duty, where the value of the excisable products involved in the offence is more that €250,000, a fine of three times the value of the products may be imposed. Persons guilty of these offences are also liable to a custodial sentence of up to five years. The specific penalties imposed in any particular case are, of course, a matter for the Courts. There are no proposals for further penalty increases at this time, but the position will be kept under review taking account, among other considerations, of practical experience of the operation of the increased fines provided for in the 2010 Act.
