Brendan Smith (Cavan-Monaghan, Fianna Fail) | Oireachtas source

I thank the Ceann Comhairle for selecting this topic and appreciate that the Minister for Finance, Deputy Michael Noonan, is present to respond to it.

As a Border county Deputy representing the counties of Cavan and Monaghan, I have a particular concern about the smuggling of fuel across the Border, not just diesel and petrol but also solid fuels. Alcohol, tobacco and a range of other products are also being smuggled across the Border. Unfortunately, that black economy is thriving and it is doing untold damage to our revenue base.

Domestic solid fuel in the North is already cheaper due to a 5% VAT rate, compared to a 13.5% VAT rate here, and an exemption from the British Government's climate levy. However, as announced in the budget in December, the carbon tax has been extended to solid fuels. A rate of €10 per tonne has now been applied with effect from 1 May, and a rate of €20 per tonne will be applied with effect from 1 May next year. I understand that is the current proposal. According to the industry, by next year that will add €2.50 to a 40 kg bag of coal and 50 cent to a bale of briquettes. A household that goes through two bags of coal a week for half of the year - which is not unusual, particularly for those houses without central heating - will pay an extra €130.

Introducing these phased carbon tax increases on solid fuels without considering their impact on poorer families and the increasing incidence of fuel smuggling is not a good example of joined-up thinking by the Government. A number of years ago when the carbon tax was first introduced, the intention was that it would not be applied to solid fuels - namely, coal and turf - until there was practically an equivalent price north of the Border. That is not the position at the moment. I know some fuel traders who are very concerned about the possible impact on the trade south of the Border due to the price differential resulting from the imposition of the extra tax. I raised this issue during the Second Stage debate on the Finance Bill and I hope the Minister will be in a position to address it. Fuel merchants have pointed out to me and many other public representatives that smuggling and the potential for further losses in the trade means they may have to let employees go, with a resultant loss of income tax, PRSI and other revenue to the Exchequer.

When the introduction of a carbon tax was first mooted in 2009, the solid fuel trade group, the industry's representative body, stated: "The proposed carbon tax would introduce a 22.5 per cent wholesale price disadvantage to Republic-based coal distributors - with the end result being the complete domination of the solid fuel trade in the Republic by coal from Northern Ireland." The group's spokesman at that time said there was evidence of coal being smuggled as far south as the Minister's province of Munster.

From an environmental point of view, it is worth noting that Scottish coal has a relatively high sulphur content, nearly three times the maximum allowed in the Republic. The industry has estimated that smugglers could make €2,500 to €3,000 per truck bringing in smuggled coal. We already know the massive profits that are made from well-organised smuggling of diesel and cigarettes and the activities, which we all find despicable, that are often funded from these operations. It seems we are now going to give even more opportunity to the same people so that they can make money and in the process deny the State millions of euro in revenue.

The Minister for the Environment, Community and Local Government yesterday announced his decision to press ahead with a nationwide ban on smoky coal. There will be benefits from that decision but there will be an additional dimension in terms of costs for consumers.

Representations have been made directly to me by many small-scale fuel merchants who are concerned that they will have severe difficulty remaining in the trade, particularly those in the three Southern Border counties, those along the Border and those even further south. I ask the Minister if something can be done to ensure that revenue is not lost to the State and that everything possible is done to protect that trade and the resultant jobs.

See this speech in context