Brendan Smith (Cavan-Monaghan, Fianna Fail)
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42. To ask the Minister for Finance his plans to introduce further restrictions to the import of fuel products, both fuel for vehicles and household fuel products, from Northern Ireland; and if he will make a statement on the matter. [16394/17]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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As the Minister is aware, the State is estimated to be losing €300 million per annum because of fuel smuggling across the Border. Numerous legitimate retailers and merchants are very seriously impacted and adversely affected. It is not confined to activities along the Border and I understand that illicit products are now also going to the southern part of our country, making it impossible for legitimate businesses to compete.

Michael Noonan (Limerick City, Fine Gael)
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The free movement of goods is a fundamental freedom of the Internal Market of the European Union and ensures that goods can move freely across intra-union borders. However, the European Union excise regime which governs the production, processing and holding of excisable products imposes certain restrictions on intra-Union movements of these products. These restrictions impact on the importation of mineral oils for vehicle and household use from Northern Ireland. The EU excise regime governing the movement of excisable products, that is mineral oils, tobacco products and alcohol, does not apply to solid fuels such as coal and, as a result, solid fuel is not subject to cross-Border movement controls typical of other harmonised excises such as mineral oil tax and tobacco tax.

I will deal firstly with the importation from Northern Ireland of mineral oils for use as vehicle and household fuels. Persons bringing mineral oil fuel for vehicles into the State from Northern Ireland must pay excise duty, that is mineral oil tax, on that fuel except where the fuel is present in the fuel tank of a vehicle at the time that vehicle is brought into the State or where the fuel is in a single portable vessel with a capacity of not more than 10 litres that is in that vehicle at the time of coming into the State, and where the proper UK excise duty applicable to the use of that fuel in the vehicle involved has been paid in that jurisdiction.

Persons bringing mineral oil into the State for use other than as road vehicle fuel, for example for heating use or for agricultural tractors or stationary motors, must pay the mineral oil tax on that fuel. In the case of gas oil or kerosene, where a person wishes to pay only the reduced rate applicable to those fuels when intended for use other than as road fuel, the oil must be marked with the fuel markers prescribed by the Revenue Commissioners.

All commercial movements of mineral oil into the State from Northern Ireland are subject to a movement control system.  Movements of duty-suspended mineral oil are subject to an EU-wide electronic system, known as the excise movement control system. In the case of movements of duty-paid oils, such movements may only take place under an equivalent paper-based control method. Where a person intends to sell or deal in mineral oils the appropriate mineral oil trader's licence, issued by the Revenue Commissioners, must be held. Other control measures include obligations on oil traders to provide detailed information on their fuel transactions to Revenue. This allows Revenue to monitor mineral oil supply chains to identify suspicious or anomalous transactions and patterns of distribution for investigation.

Additional information not given on the floor of the House

I am satisfied that the current restrictions on the importation of oil for vehicle and household use are comprehensive and support Revenue in tackling any issues regarding the illegal importation of mineral oil.

I will now deal with the importation of solid fuel, and specifically coal, into the State from Northern Ireland. All solid fuel supplied in the State is liable to solid fuel carbon tax. This tax was legislated for in 2010 but its commencement was delayed until 2013 to allow for a mechanism to be put in place to address the risk of coal products with lower environmental standards being sourced from outside the State. Regulations to enable local authorities to regulate and control the type of coal supplied in the State were put in place by the then Minister for the Environment, Community and Local Government and are now the responsibility of the Department of Communications, Climate Action and Environment.

As I already explained, EU law does not require compliance with movement controls for solid fuels for excise duty purposes. Therefore, no excise movement controls apply to imports of solid fuel from Northern Ireland, whether by private persons for their own use or by traders or businesses for commercial purposes. Revenue collects solid fuel carbon tax on a self-assessment basis and enforces compliance by way of audit. Excise law does not give Revenue an authority to stop vehicles and physically inspect loads of solid fuel. Similarly, the transport or possession of solid fuel that originated in Northern Ireland are not, in themselves, Revenue offences and Revenue's officers have no authority to challenge such transportation or possession.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I thank the Minister for his answer. Because of time constraints I only referred to household fuel. In the last Dáil I brought forward legislation calling for the establishment of an all-Ireland cross-Border agency to deal with this type of crime and the illicit trade in fuel, tobacco and drugs. Some agreements were reached between the Northern Ireland authorities and our Department of Justice and Equality to deal with the issues on an all-Ireland basis and I welcome these. I understand that a standard truck carrying 20 tonnes of coal from Northern Ireland to the South, without the application of carbon tax and with a differential in VAT, gives an advantage of more than €2,000 to the person conducting the illicit trade. It is very hard for the legitimate merchant and retailer to compete. Hardware Association Ireland has put forward some suggestions to the Revenue Commissioners and to the Department, such as the registration of all solid fuel traders provided for in the Environment (Miscellaneous Provisions) Act 2015, which requires a valid tax clearance certificate for such traders to register. The association also called for a public awareness campaign to let the public who buy these cheaper products know that they are illicit and that carbon tax or the proper rate of VAT has not been paid in our jurisdiction. Hardware Association Ireland also recommends very thorough audits by Revenue on the people involved in this illicit trade.

Michael Noonan (Limerick City, Fine Gael)
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My initial reply dealt exclusively with controls on the importation of fossil fuels. The collection of solid fuel carbon tax is heavily reliant on the regulatory regime for solid fuel put in place by the Minister for Communications, Climate Action and Environment. This regulatory framework covers the marketing, sale, distribution and burning of solid fuels in the State and sets out particular environmental standards for coal supplied here. These environmental standards are higher than those that apply in Northern Ireland. The regulations provide for the enforcement of the relevant environmental standards by local authorities. Local authorities have powers to inspect premises and vehicles being used for the sale and distribution of solid fuel, to collect samples of coal to check for adherence to environmental standards and to prosecute traders involved in selling illicit coal. It is not the Revenue Commissioners who have the responsibility for the illicit importation of solid fuel. It is a matter for local authorities under licence from the Department of Communications, Climate Action and Environment.

It has the legal powers, the staff and access to the penalties that apply to prosecute traders involved in selling illicit coal.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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The Minister is aware that the change he could effect is to change the differential in the VAT rate between Northern Ireland and our State in respect of solid fuels as well as the application of carbon tax which is not applied on products in Northern Ireland. The differential is more than €2,000 on a 20 tonne truck of coal, meaning there is not a level playing field for many of our genuine retailers and merchants who are trying to survive. I frequently get calls advising that someone is delivering product from outside the State and selling it at a rate that would not be viable if they were paying their legitimate dues as they should be.

This issue needs to be tackled. Over the years I have advocated very strongly in this House that we need to tighten control over activity in the shadow economy. It is not fair on the people running legitimate businesses and trying to survive. It is also robbing the public coffers, in this instance alone of almost €300 million annually.

Michael Noonan (Limerick City, Fine Gael)
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I again thank the Deputy for his submission. The Revenue Commissioners are not the responsible authority for preventing trade in illicit fuels. However, I will bring the Deputy's views to the attention of the Department of Communications, Climate Action and Environment, which has the competence of law and sanctions that would apply to the prevention of the import of solid fuels. I will see what it has to say.