Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I am advised by the Revenue Commissioners, who have responsibility for the collection of tobacco products tax and for tackling illicit trade in this area, that they are very aware of the threat that illegal tobacco products poses to the Exchequer and to the Government's health protection objective of discouraging smoking through high prices. Tackling this problem is a high priority for Revenue.

Cigarette smuggling is a world-wide problem and affects most EU member states. It is estimated that some 11% of the global cigarette trade is illicit. Given that tobacco tax rates and prices here are among the highest in the world, it is not surprising that there is a problem with illegal tobacco in Ireland. A survey conducted on behalf of the Revenue Commissioners and the National Tobacco Control Office of the HSE in 2012 indicates that 13% of cigarettes consumed here are illegal and that a further 6% of consumption is made up of legal cigarettes bought duty paid in another EU member state and brought in for personal consumption here.

In accordance with Article 32 of Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty, section 104(2) of the Finance Act 2001 provides that tobacco products tax is not chargeable on tobacco products that are bought tax paid by a private individual in another member state of the EU, provided that the products are for the individual's own personal use and not for commercial purposes. The tobacco products must be personally transported and accompanied into the State by that individual. This means that quantitative limits may not be imposed in these circumstances.

EU law provides for an indicative guide level which can be used solely as a form of evidence as to what constitutes a quantity consistent with personal use. The indicative guide levels are 800 cigarettes, 400 cigarillos, 200 cigars and 1 kg of smoking tobacco. Consequently, the quantity of tobacco products concerned can be taken into account only as one of a number of considerations used to determine whether the tobacco products are for an individual's own private use or for commercial purposes. This determination falls to be considered in accordance with criteria set out in Part 4 of the Control of Excisable Products Regulations 2010.

The only exception to this is where EU law permits the imposition of quantitative restrictions where member states have been allowed a transitional period to apply a rate of tobacco products tax that is lower than that required under EU excise law. Consideration is currently being given as to whether quantitative restrictions may be imposed in 2014 on cigarettes brought in from those member states that are subject to transitional arrangements and which have not achieved the minimum rate of tax required, in accordance with Council Directive 2011/64/EU.

Quantitative restrictions apply to tobacco products brought into the State from outside the EU or from territories where EU rules on VAT and excise duties do not apply, such as the US or the Canary Islands. Where passengers arriving in Ireland have travelled from these areas, they may bring a maximum of 200 cigarettes or 100 cigarillos or 50 cigars or 250 g of tobacco into the State tax free.

Interception of illicit tobacco products is achieved through a combination of risk analysis, profiling, intelligence and the screening of cargo, vehicles, personal baggage and postal packages. Revenue officers also target the illicit trade after importation by carrying out intelligence-based operations and random checks at retail outlets, markets and private and commercial premises. In line with best practice in tax administration worldwide, Revenue regards the development of information and intelligence as critical to the detection of evasion and smuggling.

In the period from January to 25 November 2013, more than 38.6 million cigarettes and more than 4,000 tonnes of tobacco were seized, which represents a reduction on volumes seized in earlier years. In 2012, seizures amounted to 95.6 million cigarettes and 5,276 kg of other tobacco while in 2011, 109 million cigarettes and almost 11,200 kg of other tobacco were seized. The reduction in volumes is believed to indicate a change in the operating patterns of smugglers who are moving away from large consignments towards smaller, more frequent consignments which are less easy to detect and which yield lower a volume on seizure.

There has also been success in detecting and prosecuting those involved in the illicit trade. In 2012, there were 132 convictions, which resulted in 47 custodial sentences, some suspended, and fines of €246,600. This year to 25 November, prosecution of those involved in tobacco smuggling and the illegal sale of tobacco has led to 87 convictions, with 32 custodial sentences, some suspended, and €147,750 in fines. The high level of seizures over recent years reflects ongoing enforcement action by Revenue.

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