Brian Hayes (Dublin South West, Fine Gael)

I thank Deputy Griffin for raising this important issue and congratulate him on the initiative he took last week in bringing together colleagues to consider the issue across Departments. As he rightly observed, it is not simply an issue for Revenue but also is an issue for the Departments of Health and Justice and Equality because of its implications.

The recent Europol EU organised crime threat assessment, OCTA 2011, reported that preferred destinations for cigarette smuggling within the EU are countries with comparatively high taxes on tobacco such as the Scandinavian countries, Germany, Spain, the United Kingdom and Ireland. The level of cigarette smuggling in a given country is influenced by a variety of factors, however, of which price is only one. These factors also include geographical location, population demographics, the level of cross-border trade, price differentials with neighbouring countries and general accessibility by air, sea, road and rail. All these factors contribute to Ireland being a destination country for cigarette smuggling.

The collection of tobacco products tax and tackling the illicit trade in cigarettes and other tobacco products are the responsibility of the Revenue Commissioners. The Deputy can be assured that Revenue is mindful that this illegal trade poses serious risks to the Exchequer, the tobacco industry and retail sales of tax-paid tobacco products. Moreover, it militates against the Government's anti-smoking policies. Tackling this problem is, therefore, a key priority for Revenue. The scale of the problem is illustrated by a survey commissioned by Revenue and the Office of Tobacco Control in 2009, which estimated that 20% of the cigarettes consumed in the State have not been taxed in this jurisdiction and that approximately 14% of cigarettes are illegal product. The remaining 6% were legal cross-Border purchases. A further survey in 2010 gave similar results. Based on these data, the loss to the Exchequer from the consumption of illicit cigarettes is approximately €250 million per annum, inclusive of VAT.

Revenue employs a multifaceted approach in tackling the illicit trade based on the development and sharing of intelligence on a national, EU and international basis, participation in multi-agency investigations into criminal networks and deployment of up-to-date detection technologies, including X-ray scanners, risk analysis and profiling. Enforcement resources are deployed both at point of importation and within the country to intercept contraband product and to detect and prosecute those involved in the illegal activity. Action at the post-importation stage includes intelligence-based operations and random checks at retail outlets and other premises.

A high-level internal group, chaired at commissioner level, examines the risks associated with tobacco smuggling on an ongoing basis and has promoted a number of initiatives aimed at counteracting the illicit trade, including the adoption of a comprehensive strategy and action plan. Within that framework, important new actions have included a series of nationwide blitz-type operations, seven of which have been conducted since the middle of last year.

In terms of detection equipment, a second mobile X-ray container scanner, to augment the one first deployed in 2006, was commissioned by Revenue in January 2010 and is now fully operational. Smaller baggage or parcel scanners are deployed at all major ports, airports and postal depots. In addition to the X-ray equipment, Revenue also uses a tobacco-detection dog.

One of the scanners is based in Dublin Port, while the second is located at Rosslare Ferry Port, but both scanners are available for deployment at other ports as required. Revenue intends to maintain and increase the frequency and variety of scanner deployments at various locations throughout the country.

The success of Revenue's enforcement operations is reflected in the fact that, to date in 2011, a total of 92 million cigarettes with a retail value of approximately €39 million, as well as more than 9,500 kg of tobacco with a retail value of some €3.4 million, have been seized. Revenue will ensure that every effort continues to be made to disrupt and suppress this illegal activity.

The scale of the problem is directly related to our efforts to discourage smoking through higher taxation of tobacco products. Ireland has the highest taxes on tobacco in the EU resulting in the highest prices and consequently there are enormous profits to be made by the illegal trade in untaxed cigarettes. In that regard, additional measures to combat cigarette smuggling will be considered in the context of the 2012 finance Bill. The matter is being actively considered by the Department on foot of advice from Revenue. The fact that I have now conceded to the Deputy that this matter is likely to be addressed again in the context-----

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