Robert Dowds (Dublin Mid West, Labour)
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I thank the Minister for being in the Chamber to respond to this Topical Issue matter. I wish we did not have to discuss tobacco at all because it is a killer which does not have any beneficial effects for anybody, but it will come as no surprise to the Minister that there is a significant level of illegal tobacco sales in Ireland. The estimates fluctuate from 30% down to 15%, with the truth being somewhere in between. I understand the Revenue Commissioners estimate that in 2011, some €707 million worth of illegal cigarettes were sold, which led to a loss of €258 million in excise duty and VAT to the State. That is particularly appalling given that so much of the work of hospitals and our health service is to do with tackling the ill-effects of tobacco. If ever there was a product that deserved to be taxed because of the cost to the State, tobacco is it.

One of my concerns is that in parts of my constituency there is a strong sense that approximately 30% of the sales are illegal, and that figure is growing. That appears to be the case in other parts of Dublin and in cities such as Waterford, according to anecdotal evidence.

I will give the Minister a couple of examples. A small shopkeeper to whom I spoke in north Clondalkin told me he let two staff go recently because of a decline in the legal sales of tobacco. The reason is not that people have suddenly stopped smoking, although I wish it was, but the growth in the illegal tobacco business. A neighbouring shopkeeper told me approximately 30% of discarded tobacco packaging outside his shop is from illegal tobacco products. While it would be preferable if people gave up smoking all together, it is galling that businesses which pay their commercial rates and keep people in work are being undermined because of illegal tobacco.

The other side of this issue is that the illegal tobacco trade benefits the criminal fraternity. Retail Ireland believes criminals in Ireland make in the region of €3 million per week from illegal tobacco sales. The most insidious aspect of that is it sucks young people into crime and inevitably some of them go on to get involved in even worse things, such as heroin and cocaine.

There are several questions about this issue to which I require answers. What is being done by the Revenue Commissioners and customs officials to stop illegal trafficking of tobacco products? What is being done to stop illegal sales of tobacco on the street? What is being done to get at the crime lords behind the street sellers who are making big profits from these illegal sales? Are the criminal sanctions adequate? Is there evidence that legally produced tobacco products are making their way into Ireland as illegal products from another country, as has been alleged to me? Has the State investigated this?

Tourists can legally bring in 800 cigarettes per person into this country and retailers reckon it accounts for 7% of tobacco consumed in Ireland. By contrast, Finland allows only 200 per tourist. Is there any way we can take a leaf out of the Finnish book to discourage people from smoking?

Michael Noonan (Limerick City, Fine Gael)
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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.

Robert Dowds (Dublin Mid West, Labour)
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I thank the Minister for his reply. I wish to put on record my absolute condemnation of the treat by Philip Morris, the tobacco producer, to the Minister, the Minister for Health, Deputy Reilly and, by extension, the State in terms of pursuing plain packaging. It is absolutely disgraceful given it is purveying a product which kills people. I fully support the Minister's efforts to bring in plain packaging.

Is there any possibility of following the Finnish example in terms of reducing the number of tobacco products brought in by tourists? It is disappointing to see the decline in the figures. Clearly the Revenue Commissioners and customs officials are aware of that and are, presumably, trying to come up with a better way to deal with this whole issue. Will the Minister comment on the sentencing of people caught selling illegal tobacco, in particular the people behind those on the street because they are the ones at which we need to get? They need to be hit very hard in their pockets and, preferably, with prison sentences as well.

Michael Noonan (Limerick City, Fine Gael)
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I fully support the Minister for Health in introducing plain packaging. We will not be diverted from that by any correspondence we receive from vested interests.

Robert Dowds (Dublin Mid West, Labour)
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Good.

Michael Noonan (Limerick City, Fine Gael)
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There is a real problem with tobacco. Much of it arises from the fact that ordinary decent citizens are buying illicit cigarettes and illicit tobacco, mainly for price reasons. As we continue to use price to discourage people from smoking, I think we will divert more and more of the trade to the illicit trade. It sounds like a cliché to say that if people stopped buying illicit cigarettes, the trade would stop very quickly. The incentive to buy is related to price. Much of the illicit trade is driven by people posing as tourists to go abroad to buy cigarettes to bring into Ireland. People can check the Internet to find very cheap flights. They can use these low-priced flights to go to countries where cigarettes are much cheaper than they are in this country. I have a suspicion that the legitimate trade is involved in the production of illicit cigarettes as well. People are able to buy very cheap cigarettes in other countries and bring them to Ireland. As they pass through the airports, nobody checks whether they are carrying more than 800 cigarettes. I accept that there are some spot checks and spot searches. Large amounts of illicit tobacco are being brought into this country by individual travellers who purport to be carrying cigarettes for personal use. If one examines the prices of some flights, one will appreciate how quickly a profit can be made, especially by those who are prepared to travel a couple of times a week. The crackdown will continue. The Revenue Commissioners are chasing this up. The major price incentive associated with buying illicit tobacco makes it difficult to stop this activity.