Brian Hayes (Dublin South West, Fine Gael)

I am replying to this important matter on behalf of the Minister for Finance, Deputy Noonan. I thank my colleagues, Deputies Feighan, O'Mahony and Fitzpatrick for raising it and for brining it to the attention of Dáil Éireann. I am informed by the Revenue Commissioners, who are responsible for the collection of mineral oil tax and for tackling the illicit trade in fuel products, that the price in Northern Ireland for regular diesel and petrol is higher than the price in the State and that consequently illegal imports of these commodities are not an issue. However, illegal activity in the form of diesel fuel laundering, which takes place mainly in this State, poses a serious threat to the Exchequer, as the Deputies have outlined.

The House will appreciate that it is not possible to accurately estimate the loss to the Exchequer from individual activities within the shadow economy. The laundering of markers from mineral oil is one of several excise fuel frauds that Revenue is proactively tackling. Marked fuel oil, or green diesel as it is more commonly known, is subject to a lower rate of excise duty on condition that it is used for particular purposes such as home heating or as a propellant in agricultural and off-road vehicles. Its use in ordinary road vehicles is strictly prohibited and there are heavy penalties for anyone convicted of such an offence.

There is a considerable difference in the rates of mineral oil tax applied to ordinary and rebated diesel. The former is taxed, including carbon tax, at a rate of 46.5 cent per litre while the latter is subject to a rate of 9 cent per litre, a difference of approximately 37.5 cent. Clearly, there is an attractive incentive for criminals to evade the higher rate of duty.

The use of marked oil in road vehicles takes two forms. In the first, a person simply puts the marked diesel in his or her tank and hopes that he or she will not encounter one of the regular road checkpoints that Revenue officers set up to detect the illegal use. However, an individual will not be able to continue with this particular method of evasion for long before detection. Anyone convicted of such an offence is liable on conviction to a fine of €5,000. If such a person is subsequently detected, he or she will be further prosecuted and his or her vehicle will be seized. While the illegal use by individuals of marked oil in road vehicles is viewed very seriously by the Revenue Commissioners, the more sinister and potentially damaging to the economy is the large scale laundering of such oil in order to make its detection at Revenue checkpoints more difficult.

The criminals - this is what they are - who carry out this evasion are solely concerned with making illicit profit and care little about the damage that their activity does to the national economy. For obvious reasons, the laundering of markers from diesel is usually carried out in remote rural locations. By its nature this activity creates environmental problems through oil and chemical pollution due to the type of oil laundered, the chemicals or filters employed in removing the markers and the dumped residue. It can cause serious mechanical damage to the engines of unsuspecting motorists. Deliveries by un-roadworthy tankers and untrained drivers have caused spillages on national roads and are a serious risk from a health and safety perspective.

This laundering also damages legitimate trade and facilitates the evasion by rogue garages of other taxes such as VAT and income tax through the suppression of this throughput. It is the belief of Revenue that without retailers who are willing to purchase and retail laundered fuel, oil laundries would have great difficulty in marketing their product. To counter this aspect, in 2007 more serious offences and penalties were introduced for persons detected selling or delivering laundered minerals.

I refer to the point raised by Deputy Fitzpatrick about a review of the law in this area to ensure the penalties are strong and robust enough to deter people from engaging in this illicit and illegal activity. As Deputy O'Mahony pointed out, previously this was an illicit trade most focused along the Border region. However, as he rightly observed, this crime is increasingly seen in many parts of the country away from the Border. The effort to counteract it is an example of the very strong action the organised crime section, the Revenue and An Garda Síochána are collectively taking to pursue those responsible. We are aware that much more needs to be done and it is an issue with which Revenue is considerably exercised. I thank the Deputies for raising the matter because of the enormous damage it potentially causes not only to our economy, to the natural environment and to motorists but also to taxpaying consumers and businesses which are operating in a legal and tax-compliant way and whose business is being taken from under them. We will keep the matter under review.

See this speech in context