Mary White (Carlow-Kilkenny, Green Party)

I am taking this Adjournment matter on behalf of my colleague, the Minister for Finance, Deputy Brian Lenihan, who welcomes the opportunity to clarify the penalty system for those involved in the illegal importation of contraband and counterfeit cigarettes.

Cigarette smuggling has serious adverse implications for Government revenues and the measures adopted in recent years to protect public health by reducing smoking. The Government is committed to tackling this illicit trade and ensuring those involved in it are detected and punished. Combating cigarette smuggling is a priority for the Revenue Commissioners which employs a multi-faceted strategy to deal with the problem. This includes ongoing analysis of the nature and extent of the problem; the sharing of intelligence on a national, EU and international basis; ongoing review of operational policies; development of analytics; deployment of detection technologies such as scanners, and optimum deployment of resources, both at points of importation and within the country, to intercept the smuggled product and detect and prosecute those involved.

An illustration of what this means in practice is the nationwide tobacco operation launched by the Revenue Commissioners in July which concentrated additional resources at ports, airports and various retail points to identify illicit tobacco products. This led to 561 seizures, totalling almost 14 million cigarettes, in a two-week period. A further intensive operation of this kind has recently taken place and more are planned. These intensive operations complement the normal ongoing level of detection and enforcement activities. A high level internal group in the Revenue Commissioners, chaired at commissioner level, works to ensure performance in tackling this illegal trade is optimised.

It is essential that this important work is underpinned by a scheme of penalties that ensures those prosecuted and convicted of tobacco-related offences can be punished in a way that reflects the seriousness of their actions. The Department of Finance, in conjunction with the Revenue Commissioners, keeps the penalties that apply to these offences under review on an ongoing basis. Substantially increased penalties were introduced in the Finance Act 2010. The principal provision under which tobacco-related prosecutions are taken is section 119 of the Finance Act 2001, as amended, dealing with the evasion or attempted evasion of excise duty. Following the stronger penalties introduced in the Finance Act 2010, where a person is convicted following prosecution on indictment, the Circuit Court can impose a fine not exceeding €126,970. However, if the value of the goods involved in the offence is greater than €250,000, the court can impose a fine not exceeding three times their value. If, for example, the goods concerned were valued at €300,000, it would be open to the judge to impose a fine of up to €900,000. The section also provides for imprisonment for a term of up to five years which can be imposed either instead of or in addition to a fine. It also allows for summary prosecution in the District Court. In that event, a fine of €5,000 can be imposed on conviction. There is provision also for a term of imprisonment not exceeding 12 months.

Certain tobacco-related offences, specifically those relating to breaches of tobacco stamp requirements, fall to be prosecuted under section 78 of the Finance Act 2005. In these cases a person convicted on prosecution on indictment can be fined up to €126,970. There is provision also for a term of imprisonment not exceeding five years. The penalties on summary conviction are the same as those under section 119 of the 2001 Act. There is also a procedure under which prosecutions taken on indictment can be dealt with summarily, in accordance with the Criminal Procedure Act 1967, where the accused person pleads guilty and the Director of Public Prosecutions consents. Following the changes introduced by the Finance Act 2010, the court may impose a fine of €5,000 in such cases and may also imprison the convicted person for a term not exceeding 12 months.

The Minister is satisfied, therefore, that the revised fines introduced in the 2010 Finance Act allow for the imposition of penalties commensurate with the seriousness of the offences connected with smuggling and trading of illicit cigarettes and other tobacco products. While he does not consider that any further increase in the level of the fines is required, the situation will be reviewed regularly.

Senators will appreciate that the punishment to be imposed in a particular case is a matter for the courts, having regard to all the relevant circumstances. There have been 128 convictions to the end of November this year, of which a total of 90 were for smuggling and the total amount of fines imposed was €45,780. The other 38 convictions were in respect of the selling of unstamped tobacco products and, in total, fines of €103,250 were imposed. In addition, 20 terms of imprisonment were imposed, 12 of which were suspended.

In addition to the various penalties the courts may impose, the Revenue Commissioners may seize any illicit cigarettes detected. To the end of last month, more than 167 million cigarettes, with an estimated retail value of in excess of €70 million, have been seized this year. Revenue is also empowered to seize vehicles used to convey illicit cigarettes and 122 vehicles had been seized up to the end of November. As I have outlined, the level of penalties in the legislation is strong; however, the average level of penalties being imposed is considerably lower than that provided for in law.

The Minister trusts that the information provided will help to clarify the position on the level of penalties provided for for the smuggling of cigarettes and the illegal sale of tobacco products.