Declan Breathnach (Louth, Fianna Fail)
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I move: "That the Bill be now read a Second Time."

I am delighted to introduce the Sale of Illicit Goods Bill on Second Stage. In doing so, I wish to acknowledge the input of RAS, the Retailers Against Smuggling organisation, and the report compiled by Grant Thornton on illicit trade in Ireland. I also wish to thank my Fianna Fáil colleagues for allocating the time for this debate.

The smuggling trade in Ireland was previously thought of as a form of cute hoorism, a fairly innocuous activity whereby people, mainly in the Border region, found ways of earning a little extra income. Being from a Border region, I see at first hand the damage that current illicit trade activity does to the livelihood of retailers. This is a no longer just a Border problem, but a nationwide problem with illegal cigarettes, alcohol and fuel ending up for sale on every street of every village, town and city in our country. Unfortunately, smuggling has become a massive illegal criminal activity, causing huge losses in revenue to the State and retailers. In 2009, for example, €50 million worth of contraband cigarettes were confiscated at Greenore Port. That 120 million illegal cigarette haul was the largest ever seized anywhere in Europe.

Currently, there is no deterrent to purchasing smuggled goods as it is not a crime. The aim of the Bill is to deter people from buying illicit alcohol, solid fuel and tobacco by introducing on-the-spot fines for purchasing goods where taxes have not been paid. This is a necessary measure to protect small and not so small Irish retailers. The primary benefit of the legislation is not that it will create a punishable crime, but that a clear message is being sent that one should not purchase these products because one is facilitating criminal gangs by doing so. The level of criminality could be curtailed if purchasers were more aware of how they aid and abet the criminal underworld.

Illicit trade continues to be a huge burden on the Exchequer and on small businesses. In addition to the 20% to 30% of direct turnover retailers are losing, they also miss out on add-on purchases of other products in the store. Some 13% of all packs of cigarettes held in Ireland are illegal, representing a loss to the Exchequer of €229 million in 2017 alone and €1.7 billion between 2010 and 2017. As RAS has said, this is enough to build 8,400 social housing units. Instead, the money goes directly into the hands of criminal gangs. In the case of alcohol, during 2017 the Revenue Commissioners seized 95,021 litres of illicit alcohol with an estimated value of €0.91 million. Total seizures of alcohol in Ireland have increased by 100% and continue to increase yearly. The loss to the economy from 2010 to 2014 alone was €655 million, money that could be spent on our ailing health service rather than lining the pockets of criminal gangs.

On a personal note, I know festival organisers who were approached and offered a lucrative amount of money to sell the empty big brand vodka bottles. Presumably, it was intended to fill them with cheap hooch. We should be mindful that there is also a health issue with illegal alcohol and cigarettes in that we do not have a clue what is in these products. Similarly, the solid fuels are beyond smoky and pollute our environment. With the recent increase in carbon tax in the budget and the smoky coal ban due to be implemented next year, the likelihood of an increase in fuel smuggling over the Border is extremely high.

There have been very few convictions compared with the amounts that have been confiscated. In March 2017 an illegal cigarette factory was discovered in my home county of Louth that was capable of producing 250,000 illicit cigarettes per hour. Two fuel laundering plants were also discovered in Louth. A counterfeit vodka production plant was discovered as well. These discoveries, and the year on year growth in the number of illicit products in the country highlight the importance of the Bill. Brexit has created a political atmosphere that will likely make cross-Border smuggling more lucrative due to a fluctuating sterling and potential tariffs. Extra resources and protections are needed for small legitimate retailers who operate along the Border to ensure there is no increase in smuggled goods entering Ireland.

The Bill ensures that a major gap in the legislation surrounding illicit trade is closed. The next steps are to ensure that retailers and the Revenue Commissioners do not lose yet more money to criminals.

It is alarming news that only one third of the required extra 600 customs officials will be operational next year. Smuggling takes huge volumes of business away from legitimate retailers every year. This problem will only be exacerbated by Brexit.

A 2018 survey conducted by Retailers Against Smuggling found that Border retailers are 63% more concerned about the likely impact Brexit will have on their communities with regard to smuggling than they were this time last year. Year on year, excise increases directly affect retailers' profits by encouraging the purchase of smuggled and illicit goods. At present, the price of a pack of cigarettes is €12.70 when purchased in a responsible retailer’s store. Retailers simply cannot keep up with the €5 packs that are sold by criminal gangs on the streets. We must remember also that this illegal activity is feeding into more serious crime. We can be sure that the criminal gangs involved in the illicit trade of tobacco, alcohol and fuel are also the same gangs involved in drug trafficking. We must stamp out these sources of income into these gangs.

Many people who struggle will look to buy the cheap product, be it cigarettes, fuel or alcohol. They may call me or others the killjoys. They may say that they need to purchase the cheaper product. They must remember, however, a number of issues. Studies have shown that the quality of the product is suspect and is often dangerous and detrimental to health. They need to know they are lining the pockets of criminal gangs. They also need to know that small businesses, which are the lifeblood of communities - ours and theirs - are closing down every day because they cannot compete with this illicit trade.

Mary Butler (Waterford, Fianna Fail)
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Fianna Fáil, through Deputy Breathnach, is bringing forward this legislation to tackle the sale of illicit goods such as tobacco, alcohol and solid fuel. The Bill seeks to make it an offence to purchase such illicit goods, particularly from an unregistered or unlicensed retailer.

Illicit trade is continuing to develop in Ireland and is becoming a real threat to the Irish economy. According to some estimates the black economy costs the overall economy over €2.3 billion a year and costs the Exchequer more than €800 million a year. We do not know the true figure as by its very nature this activity remains unseen so the costs could be far higher.

Tobacco sales are a large part of the business of many small shops. Government excise duties have increased the cost of a 20-pack of cigarettes to an all-time high. This in turn has turned customers towards illegal traders who are selling illegal, and sometimes unsafe, products at a much lower price.

As an incentive for the supply and demand of illicit products price remains the main driver of illicit trade. There is also another issue, however, which is health. Illicit cigarettes are often illegally manufactured and imported from foreign countries such as China or Paraguay, with a lack of quality control or regulation. Some illicit cigarettes have been found to contain dangerous chemicals, dust, excessively high tar levels and even asbestos. While the non-financial impacts include health, smuggling also undermines the legal and regulatory system, grows organised crime and causes reputational damage to brands. There is growing anecdotal evidence to suggest that the solid fuel trade on this side of the Border has been affected by a combination of cheaper prices for similar products in the North and by fuel smuggling.

Small and medium-sized businesses simply cannot compete with the low prices being offered for these illegal and frequently fraudulent products. Small businesses are the lifeblood of local communities in towns and villages and we need to do more to help protect them from the impact of smuggling.

Online sales are already a huge competing factor for the retailer located on the high street who is dealing with all the costs of rent, rates, VAT, insurance and staff costs. I am the Chairman of the Oireachtas Joint Committee on Business, Enterprise and Innovation, which recently conducted a detailed study into the cost of doing business in Ireland. There were very many common denominators going through for the retailer as against the online retailer. The report referred also to how smuggling is having a huge effect. The ongoing sale of illicit goods may well be the tipping point for many legitimate businesses.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I compliment my colleague Deputy Breathnach on bringing forward this important legislation. Like Deputy Breathnach, I represent a Border region, the two counties of Cavan and Monaghan, which have a very long land Border with the neighbouring jurisdiction. We know that due to historical reasons, the area north of the Border is lightly policed, to put it mildly. Criminality has, unfortunately, flourished north of the Border in some areas in particular over the years. Our own areas south of the Border have not been short of criminality either.

In the last Dáil I brought forward legislation advocating strongly for the establishment of a cross-Border crime agency and for an intensification of co-operation between Government departments North and South and between the statutory agencies. The Government at that time did not accept my proposals but I was glad that some elements of my party's proposals were incorporated into some legislation around the Stormont House Agreement. There have been some welcome moves in that direction with more intensified co-operation between the relevant Departments and statutory agencies North and South.

The Minister of State, Deputy D'Arcy should be aware that over the years, small and medium enterprises, as well as larger-scale operators, survived through very difficult times. We saw the trade going to the North. We still see the illicit products coming in and tempting to the consumer. I could walk into some housing estates and people will tell me that Joe or Josephine Soap were around selling their illicit tobacco products again, which, as Deputy Butler observed, come from God knows where. These goods, however, come through Northern Ireland in particular, as well as from Britain.

We need intensified co-operation between the Revenue Commissioners and their counterparts north of the Border and between An Garda Síochána and the PSNI. We also need increased co-operation between the Environmental Protection Agency and its counterpart in Northern Ireland because we should always remember that too often in this illicit trade, sludge is dumped in drains and on the banks of rivers.

That is a real threat to the provenance and the good name of our agrifood industry. That Border area in particular is heavily dependent on the agrifood industry. It has a great reputation, which is well deserved and hard earned, for producing top-class food that is exported throughout the world. If there is any question mark regarding the quality or provenance of the raw material, the primary product that goes into the manufacture and processing of food, we are in real danger and real trouble with regard to continuing to retain the more than 161 markets we have throughout the world. I again compliment my colleague, Deputy Breathnach, on bringing forward this legislation. We must ensure that every effort is made to protect the small and medium enterprises in the particular sectors referenced in this legislation.

Anne Rabbitte (Galway East, Fianna Fail)
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I too want to be associated with this Bill this evening. I thank Deputy Breathnach for bringing it forward. He has demonstrated his perseverance in bringing this Bill here tonight because, since he first came into the House, he has spoken consistently about the illicit trade taking place between North and South, as have his other Border colleagues, who have highlighted it continuously. It is fitting that this Bill should be before us. In recent months, I also have met Lorraine Higgins, the chief executive officer of Retail Excellence. She has spoken repeatedly on this issue and on what her retailers are experiencing on the ground.

Tonight, however, I intend to look at this from a totally different angle. I will not be looking at it just in respect of the illicit goods but in respect of those who participate in the trade. In respect of many of these issues, it can be seen that children are participating. In many cases, they are the mules for the sale of the illicit drugs, that is, the cigarettes and the alcohol. Earlier this year, my colleagues and I brought forward a "Fagin's law" to try to protect the children at the centre of the issue. Only recently, I visited Ballymun with Councillor Paul McAuliffe, who spoke about young people who are still at the centre of the sale of these illicit drugs, be they alcohol or tobacco.

What is really important about the legislation being brought forward tonight - it is regrettable that the Minister of State does not see it through these eyes - is that from a child protection point of view, we are putting the onus on the adult who purchases the goods. There is a fine and a sentence. There is reference to the first, second and third offence. What we are trying to do is to put the onus back on the adult. The adult should have the responsibility to ask where is the regulation or the governance regarding the goods he or she is buying. That is what we are trying to do and is what this legislation is about. It is far too easy for adults to use children as pawns in the centre. This legislation tries to protect children, give them back their childhoods and, sometimes, protect their lives. Children are being used right across this country in the sale of illicit drugs and that is wrong. It is incumbent on all of us here to be very serious about the child protection rules. This is one opportunity to protect children.

Michael D'Arcy (Wexford, Fine Gael)
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I welcome that this Bill has been brought to the House. It is only appropriate that I should acknowledge the sentiments behind it because I support the objectives as set out by the proposers, as does the Government. However, while agreeing with the objective of the Bill, which is to address the illicit trade in excisable goods, I cannot support the means being proposed to meet this objective. It is accepted by all interested parties that smuggling, and shadow economy activities in general, pose a threat to legitimate and compliant businesses and to consumers, as well as depriving the Government of tax revenues. Tackling these illegal activities is, therefore, a key priority and Revenue has implemented wide-ranging programmes of action to combat them.

This Bill seeks to introduce legislation which would make it an offence to purchase or attempt to purchase alcohol, tobacco products or solid fuel on which excise duties or VAT had not been paid, where the purchaser knew, ought to have known, or was reckless as to whether these taxes and duties had been paid. The Bill also seeks to make it an offence to purchase alcohol, tobacco products or solid fuel from a supplier that is not included in the list of valid liquor licences, the national tobacco retailers register or the list of solid fuel suppliers, respectively.

Up to this point, the focus of the measures taken to deal with the trade in illicit goods and fuel fraud has been firmly on tackling the supply chain to limit illicit goods getting on the market. This approach, which has been implemented through Finance Acts and other supporting measures in recent years, has been working. For example, the measures which have been introduced to combat fuel fraud in various Finance Acts and Revenue initiatives have had a major impact on the illicit trade. In addition, there has been continued progress in containing the extent of the illicit tobacco trade, notwithstanding the high rate of tobacco excise and the incentives such a policy creates for the illicit trade. The approach outlined in this Bill, which aims to address the illicit trade by tackling purchasers of illicit goods rather than the suppliers, raises a number of serious issues.

In order for the offence to be detected, the Bill gives significant powers to authorised persons - An Garda Síochána or the Revenue Commissioners - to require any person who they know or reasonably suspect of purchasing illicit goods to, among other things, produce evidence of identity and allow for the inspection of the suspect goods, as well as any vehicle of which he or she may be in control. The Bill also provides that the authorised person can arrest without warrant any person who refuses to do so. The Bill also proposes the introduction of a fixed penalty system to be imposed on persons where there are reasonable grounds to believe the person has purchased illicit goods. The Bill also allows for substantive amendments to be made to its content by means of regulations.

I will now deal with the main aspects of the Bill. First of all, I am advised that in practice it is extremely difficult, if not impossible, to establish the evidence that would support conviction of a person for knowingly buying illicit goods. Even leaving aside the issue of trying to prove that the purchaser had the intention of purchasing illicit goods, it would be hard to support a conviction on the basis that it can be extremely difficult to distinguish genuine goods from illicit goods. The Bill assumes that consumers can readily establish whether certain goods are illicit or not. It places an onus on the purchaser to actively check current registers for tobacco, alcohol and solid fuel traders in advance of making a purchase. However, as an example, the list of current valid liquor licences runs to almost 3,000 pages and is only available on the Revenue website. Similar issues would arise with the registers of tobacco retailers and for solid fuel products. In the case of the latter, a person only needs to be on the EPA register for solid fuels if bituminous coal amounts to more than 50% of turnover and there is no requirement to register for peat sales. I also note that not all EU member states require a tax stamp for tobacco products. In such circumstances, putting a responsibility on consumers to prove that goods are not illicit is likely to raise serious issues of legality in terms of how the provision could be enforced in practice and prosecuted via the courts. By way of previous example, section 102(1)(c) of the Finance Act 1999 previously contained an offence of purchasing fuel from a person who did not hold a mineral oil trader’s licence. This provision was repealed in 2013 as it was not possible to prove any unlawful intent on the part of the person who purchases fuel at an unlicensed filling station.

The Bill provides for more onerous powers of arrest and search against purchasers of illicit products. Currently Revenue may only search receptacles for tobacco products and does not have the power of search of person for tobacco products. The introduction of the power of search of person would commit Revenue to a policy of increased physical confrontation with persons for which its officers are not equipped or trained. There always will be a likelihood of physical resistance and assault, and this is best left to An Garda Síochána.

6 o’clock

Apart from the fact that such powers inevitably will be challenged in the courts on the basis of proportionality to the alleged offences involved, I am advised Revenue does not have the capacity to arrest, hold or search persons under this proposal. Even if this power of arrest was assigned to Revenue, it would imply significant costs to put the facilities and infrastructure in place to protect the rights of the arrested persons while they were under arrest.

The Bill proposes to introduce a fixed penalty notice system for purchasers of illicit goods. Apart from the significant IT and staffing resources that would need to be reallocated from other enforcement priorities to oversee such a regime, the practicality and effectiveness of issuing fixed penalty notices to persons who may buy illicit goods is questionable. It is most unlikely that many offenders will voluntarily pay an amount that is well in excess of that which, even in the event of a successful prosecution, a court is likely to impose. In addition, many persons may give false names on being challenged and will not have identity documents. Both of these issues would result in increased arrests and referrals to the courts, which may result in a significant resource issue for all parties. These resources include Revenue staff and legal costs, as well as the accused’s costs, including, for example, any State provided legal aid to which he or she may be entitled.

Revenue acts against all aspects of the illegal tobacco trade, in order that the illicit products involved can be seized and those responsible for smuggling or supplying them can be prosecuted. A combination of risk analysis, profiling and intelligence and the risk-based screening of cargo, vehicles, baggage and postal packages is used to intercept illicit products. Action after importation includes checks at retail outlets, markets and private and commercial premises. This action has achieved considerable success, with the seizure in 2017 of 34 million cigarettes and 1,768 kg of tobacco. In March this year a joint operation with An Garda Síochána led to the closing down of a major illicit cigarette factory in Jenkinstown, County Louth. Over 20 million cigarettes and 70 tonnes of tobacco were seized at this facility, which could produce 250,000 illicit cigarettes an hour.

Revenue and An Garda Síochána work together on an ongoing basis in acting against fuel and tobacco crime and both bodies co-operate closely with their counterparts in Northern Ireland within the framework of the North-South joint agency task force. I am advised this co-operation plays a key role in targeting the organised crime groups responsible for much of this criminality, which operate across jurisdictions. On the alcohol side, duties provide a financial incentive for alcohol fraud but there is little evidence of large-scale illegal activity at present. Illicit trade in alcohol can occur through the illegal diversion of untaxed alcohol onto the market and also through the illegal production of counterfeit alcohol. Revenue is very alert to these risks. Revenue’s action is based on intelligence on criminal activity, risk-based examination of commercial traffic and of stock in retail premises.

As a result of the price differential with Northern Ireland, the collection of solid fuel carbon tax is heavily reliant on the regulatory regime covering the marketing, sale, distribution and burning of solid fuels in the State. This regulatory regime is operated by the Department of Communications, Climate Action and Environment and is enforced by local authorities. This regime, which imposes higher environmental standards on coal in the State than applies in Northern Ireland, enables local authorities to undertake enforcement action to prevent the sale or distribution of coal that does not meet our standards. I am advised that Revenue has engaged with the Department of Communications, Climate Action and Environment to discuss the effectiveness of the regulatory regime for solid fuel and to explore how Revenue could support the Department to improve matters in light of continuing concerns that fuel sourced from Northern Ireland is getting onto the market here. I understand that contacts are ongoing with a view to undertaking a number of joint operations and to explore the scope for follow-up action by Revenue on persons found to be in breach of these regulations. However, any such operations will be based on a clear understanding of the statutory responsibilities of the agencies involved. While the Bill does not specifically address the issue of fuel laundering, the steps taken by Revenue to combat the illegal fuel trade include the introduction of stringent new supply chain controls and reporting requirements, together with a rigorous programme of enforcement action, demonstrate how tackling the supply chain can produce the desired results. I understand the industry view is that the measures implemented to date have been successful in significantly curtailing fuel fraud in Ireland.

Ultimately, the Bill broadens substantially the scope of compliance activity by tackling purchasers of illicit goods rather than the suppliers as heretofore. In practice, it would be extremely difficult, if not impossible, to establish the evidence that would support conviction of a person for knowingly buying illicit goods. The proposals contained in the Bill are not just unworkable but would undermine the good work that is ongoing in this area by diverting resources from where they are most required. Accordingly, I cannot support the Bill.

Donnchadh Ó Laoghaire (Cork South Central, Sinn Fein)
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I will begin by welcoming the Bill and thanking Deputies Breathnach, Lahart and Troy for bringing it before the House. We will not oppose the passage of the Bill to Committee Stage. There are flaws in it, which the Minister of State has identified. We hope to work constructively to improve it on Committee Stage. We will support it because in principle we believe that where somebody is knowingly purchasing illicit goods, it is wrong and there should be a sanction. However, I share some of the Minister of State's views that it may be difficult to implement. It is something that can perhaps be explored further on Committee Stage.

My understanding of the Bill is that if passed it would make it an offence to purchase illicit alcohol, illicit tobacco and illicit solid fuel as well as making it an offence to purchase such goods from an unregistered or unlicensed retailer. I question the ability of the Garda to implement such legislation but the theory is good. We can explore that further. It is proposed by the Bill that we provide for the imposition of a penalty in respect of such offences and provide for an on-the-spot fine in respect of such offences. It is a welcome proposal though it may have resource implications. We need to be conscious of the relationship between the on-the-spot fine and any potential court fine.

With regard to the provisions of the Bill, section 4 deals with illicit alcohol. Section 4(1) makes it an offence for a person to buy or attempt to buy alcohol in circumstances where he or she had known or should have known that taxes and excise duty had not been paid on that alcohol.

Section 5 deals with illicit tobacco. Section 5(1) makes it an offence for a person to buy or attempt to buy tobacco in circumstances where he or she had known or should have known that taxes and excise duties had not been paid.

Section 6 deals with illicit solid fuel. Section 6(1) makes it an offence for a person to buy or attempt to buy solid fuel in circumstances where he or she had known or should have known the relevant taxes had not been paid. Section 6(2) defines the term "relevant taxes and duties" which is used in section 6.

Section 8 deals with the purchase of alcohol, tobacco and solid fuel from an unregistered or unlicensed retailer. Section 8(1) makes it an offence for a person to buy an alcohol product from a person whose name is not included in the list of current valid liquor licences, which is maintained by the Revenue Commissioners.

Section 10 provides for immunity from suit of an authorised person for an act which is done in good faith.

Section 7 deals with the burden of proof in a prosecution. I have some reservations about it. In respect of a prosecution under sections 4, 5 and 6, it provides for the application of a rebuttable presumption to the effect that the required taxes and duties have not been paid. The onus will be on the suspected offender to demonstrate the relevant taxes and duties have been paid. This seems to an extent out of step with normal practice. I am also conscious of the potential interplay between section 7 and sections 4, 5 and 6. If it is the case that somebody can be prosecuted for purchasing illicit goods or being reckless to that effect but it has not been proven that excise and taxes have not been paid on it because the onus of proof is on the suspected offender, is it possible somebody could be convicted without it having been proven that there were no taxes on it?

It is a potential difficulty which needs to be addressed.

There is a provision for test purchasing but it is not immediately clear to me from reading the proposal whether this will be undertaken by the gardaí or members of the public employed by or on behalf of the gardaí. It is something of which we need to be cautious. Will the Fianna Fáil representatives elaborate on that in their closing remarks, as clarity is needed? Test purchasing is used quite regularly with alcohol through garda programmes to tackle underage drinking but it is not immediately clear to me that a garda programme is intended here, although if it is that is fair enough.

Tobacco is one of the most extensively smuggled substances in the world, with one in ten cigarettes sold in the EU coming from the illicit trade, which means that Governments are robbed of millions of euro in potential revenue and that tobacco contraband is a lucrative criminal business. The tobacco lobby is strong in the EU and the top companies spend millions every year on lobbying in Brussels. They employ lobbyists to engage with MEPs on issues they believe to be relevant to their business. The tobacco industry claims the problem with the illicit trade of tobacco is counterfeit cigarettes, but even its own data show that most of the illicit trade products are manufactured by the tobacco companies themselves. There is a need, therefore, for a separation of the problem and the solution. There should be no influence from the tobacco industry in putting in place an effective tracking and tracing system. Before the budget, fuel suppliers warned that the smuggling of coal would increase significantly if carbon taxes were applied. Coal is already brought into this jurisdiction from the North, often originating in Scotland. Some of this coal has a high sulphur content of up to 7% and would not be allowed to be sold here, according to the industry. The issue of the sale of illicit alcohol has a long history, probably dating far beyond partition, but it is still a significant issue which needs to be addressed.

We support the proposal for on-the-spot fines but the fines should be ring-fenced for the health system to deal with the fallout from smoking and drinking.

In general, there is merit to the proposal but some of the technicalities and details need to be ironed out on Committee Stage.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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I welcome that this debate has at last come to the floor of the Dáil and I commend my colleague, Deputy Breathnach. While we will not oppose the Bill's passage on Second Stage, there are legitimate concerns about the criminalisation of the end user, just as there have been regarding those found in possession of illegal drugs for personal use. The real criminals here are those who manufacture, distribute and supply these illicit goods. I urge Government to join Opposition Members in seriously addressing the black economy and those who profit from it by allowing this Bill to be passed to Committee Stage.

I will now speak specifically about the illicit tobacco trade. We all know the serious threat that the use of tobacco products presents for the health of users and those exposed to this habit. We also know it is a fact that some 5,200 deaths per year in this State directly relate to cigarette smoking. Tobacco smoking-related health issues cost the public health budget an estimated €1 billion plus annually. A series of measures designed to encourage current users to quit the habit, discourage tobacco smoking and discourage young people from taking up smoking have a worthwhile impact, but they are undermined by the expanding market in contraband cigarettes. Smuggling gangs trade in products that cause serious health concerns and certain early death for thousands annually. They also undermine legislators' efforts to curtail cigarette smoking by offering these killer products at a significantly lower price than the legally marketed products sold through recognised retail outlets. Smuggling gangs cost the Exchequer an estimated €210 million annually, contributing negatively to our collective capacity to see the return and development of our public services including our acute hospital and community-based healthcare services.

I acknowledge the efforts to date of the Revenue Commissioners, An Garda Síochána and others seeking to confront and eliminate this illicit trade. In our further consideration of this Bill, therefore, I urge Government and all parties to give the lead in a European Union-sponsored clampdown on this nefarious trade. It will not be done on the island of Ireland alone. I urge Government to note that this clampdown must include an investigation of the potential involvement of legitimate cigarette manufacturers in facilitating this illegal smuggling business. If links are established, the most serious penalties must be applied and enforced in each affected jurisdiction. It must also introduce further legislation to bring in heavy fines on conviction arising from involvement in cigarette smuggling into this State, including involvement in any role with these criminal gangs; promote and secure co-operation between the relevant customs and excise and police services across the suspected supply lines; target where possible those who are the primary beneficiaries; and act with real purpose and immediacy on what I believe is the clear wish of all legislators in this House, namely, to stamp out the activities of these traders in death and contribute positively to our ongoing and shared efforts to make Ireland a tobacco-free society.

This Bill deserves further and careful consideration. I am not yet convinced that its primary proposal to target the purchaser of these illicit products is the course to take, but I have an open mind and I am willing to be convinced of the legitimacy of this course of action. I fully support its targeted intent of seriously curtailing and, better still, eliminating these illegal businesses and, in the case of illicit tobacco, significantly reducing the overall adverse impact that tobacco products have on the health of the nation. I encourage the Minister of State, Deputy D'Arcy, and Government to support the passage of this Bill to Committee Stage, where further careful consideration might help ensure we have a Bill that we can all support and that will deliver on the clear intent of its author and those of us who support the core proposition and thoughts behind it.

Joan Burton (Dublin West, Labour)
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I thank Deputy Breathnach for bringing this proposal for legislation before the House. As Deputies from Border areas know, there is a further expansion and explosion of illicit trade at the moment. We are approaching Christmas, which is the most important period for many retail businesses in Ireland for selling goods and making a living, yet due to the illicit trade, especially along the Border, many people's livelihoods effectively will be wiped out, destroyed or reduced to a feebleness that means their long-term viability is at stake.

The Bill proposes to cause a shock to consumers because should they be involved in the purchase of illicit goods, they might be subject to a penalty. Large numbers of young people have no awareness that buying items, particularly alcohol and cigarettes, from the equivalent of the back of a van, or walking down to Moore Street or other market areas throughout the State and buying items the provenance of which they are unsure but which are much cheaper have serious social and economic consequences. There are also serious health consequences for the users of these counterfeit and illicit products. It is a problem in a consumer-driven society. I can understand that many Deputies would balk at introducing a consumer-oriented penalty, but we must recognise that the proposal results from both frustration and fear. We are in the middle of a discussion about technology being the way to a frictionless, seamless border that will properly provide for the passage of goods and services back and forth over the Border in Ireland. Notwithstanding that, there is a great risk of illicit activity increasing in the event of a difficult Brexit.

Deputy Breathnach calculated that there was a significant loss of revenue to the Exchequer which brings me to a political point. Ours is a State with strong welfare, education and health systems, which we would all like to be better resourced. The State relies on taxation to provide those resources. If a significant cohort of people, be they criminal gangs or individuals, are able to avoid paying legitimate taxes on products the services that we want to provide in all areas of Ireland, urban and rural, will be beyond our means. There are strong fiscal reasons to give this legislation serious consideration.

Furthermore, in the case that any Minister for Finance experiences an additional inflow of revenue, some of that must be spent on beefing up the capacity of customs and Revenue resources to pursue these types of offences. In Revenue, the old style inspector of taxes has gone and there are many more general staff, who, to be fair, are doing their best to train-up. However, in places such as Dundalk and Letterkenny, we need more specialist staff, whether they be formally allocated to customs or Revenue staff, to crack down on these Border gangs. The same is true of policing services. We need to recognise that what is happening along the Border is undermining our efforts to achieve a fair and balanced taxation system which allows the kind of services that we all want to be available.

On tobacco, it is galling that while we are running a successful tobacco harm-reduction campaign and, hopefully, persuading more people to give up cigarettes, there is a back door facility where the stuff can be bought as cheaply as possible. We do not recognise how that contributes to encouraging young people, in particular, to continue to smoke, and when they can buy alcohol so cheaply, to drink to excess in a way that can so often shatter their personal lives, not to mention their long-term health and the peace and contentment of their families.

It is essential that we are very clear-eyed that, no matter what type of Brexit emerges, we must address smuggling and contraband. I am told that many smugglers do not just travel along the Border but they bring their contraband deep into the Republic, 100 miles or more away from their traditional area. One must consider that all this returns to burden small-scale retailers, pubs and other outlets, particularly in rural Ireland, who simply cannot compete in any serious way with contraband markets that offer so much at cheaper prices, robbing the Exchequer of its correct revenue.

This discussion is timely. We should take consequences into account, on the one hand, of increased smoking and alcohol consumption because of this trade and, on the other, of the State's taxation capacity. As such, I welcome the Bill. It will be a matter for Government primarily but it would be interesting to see it support the Bill and use the consequent revenue to put in place a better system and better services.

Maureen O'Sullivan (Dublin Central, Independent)
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I welcome the Bill. Notwithstanding the great work that Revenue and customs staff do, smuggling is a major issue. It needs more State focus and intervention to combat the industry. We know it leads to a loss of Exchequer funding, damages legally operating businesses and costs jobs in a variety of sectors.

I know from parts of Dublin Central that the sale of illegal cigarettes is lucrative for smugglers. While we acknowledge the dangers of smoking, the cost to health and to the health service, what is almost an annual 50 cent increase on a standard packet of cigarettes is contributing to an increase in smuggling and illegal selling. Tobacco is a legal and controlled product that premises are licensed to sell in accordance with the law. This year-on-year increase is punitive and does not help the retailers. However, it benefits smugglers and illegal sellers. There is a need for joined-up thinking between the Department of Health, the Revenue Commissioners and customs staff to examine the best way forward to eradicate smoking without lining the pockets of smugglers at the expense of retailers who pay their taxes.

The increase in illicit trade in solid fuel is also an issue. Grant Thorton has estimated that 30% of the market is now illicit.

People do not know what they are buying. There are risks to health and the environment; people who buy illegal cigarettes do not know what is in those cigarettes. They can be even more damaging than those sold legally; at least one knows what one is getting in the packet.

Revenue and customs have been to the forefront in the fight against illicit sales, but we know that those services will be stretched further when it comes to Brexit. The onus must shift from search and seize to consumer responsibility and consumer consciousness of the products they are buying. We have to expose the dangers they face when they buy illicit fuel, alcohol and cigarettes.

Another issue not mentioned in the Bill is the trade in smuggled animals, in particular puppies. It is no coincidence that some puppy farms are in Border counties, because those who operate them have the opportunity to smuggle puppies into the UK. These puppies live in horrendous conditions. We have had legislation, guidelines and review of guidelines, but without proper enforcement on this issue, and the other issues I have mentioned, that will continue. We have to get the point across that these products are not bargains, but that they are costly.

Tommy Broughan (Dublin Bay North, Independent)
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I am delighted to contribute to the debate. The illicit trade in cigarettes alcohol and solid fuel is reported to have cost the Exchequer up to €2.5 billion between 2010 and 2015. Of course, exact figures are difficult to come by but this is probably a conservative estimate. The problem became so acute that a group known as Retailers Against Smugglers, RAS, was established and is said to represent more than 3,000 small and medium-sized retailers throughout the country. Earlier this year an illegal cigarette factory was unearthed in Jenkinstown, County Louth, and RAS says that the fact that this factory existed at all demonstrated the demand for illicit tobacco products.

Deputy Breathnach introduced the Bill in April 2017 and I commend him and his Fianna Fáil colleagues, Deputies Lahart and Troy, for bringing it forward. Like other Deputies, I urge the Government to ensure the Bill progresses to Committee Stage. It provides for measures to tackle the illegal trade in alcohol, tobacco and solid fuel such as coal, briquettes and sod peat. Upon the passing of this Bill, it would be an offence to purchase these goods illegally and also to purchase them from unregistered or unlicensed retailers. It provides for the imposition of a €100 on-the-spot fine for purchasing tobacco, alcohol or solid fuel illegally from an unregistered or unlicensed seller. Of the estimated €2.4 billion in lost revenue, it is reported that smuggling of solid fuels accounts for approximately €435 million and smuggling of tobacco accounts for around €450 million.

The illegal cigarette factory in Louth was closed in March, and the photographs of the plant show the sheer scale of the operation. The capacity of the factory was reported to have been approximately 250,000 cigarettes per hour. Combatting this element of the so-called shadow economy is a high priority for the Revenue Commissioners, with a confidential illegal cigarettes hotline for reporting instances of illicit tobacco trade. According to the Revenue website, it works alongside An Garda Síochána, the Criminal Assets Bureau, CAB, European Anti-Fraud Office, OLAF, and Europol to combat this illegal trade, which costs the Exchequer so much in lost excise. Revenue also states that it works closely with agencies in the North to combat cross-Border illicit trade. This will become even more pertinent early next year, depending on how the Brexit negotiations pan out and the impact begins to be felt. When the Minister of State replies, perhaps we could get some information on the approach to dealing with Brexit in this regard. During this summer, 8 million cigarettes were seized at Dublin Port. Retail Ireland said that nine out of ten retailers on both sides of the Border believed that smuggling was damaging their profits and their ability to make a living.

It is an international problem. Reports say that approximately 85% of smuggled cigarettes in London were found to be counterfeit and there are seizures of at least 1 million counterfeit cigarettes daily in the UK. The illicit trade in tobacco in South Africa is reported to have doubled in the past number of years, and countries such as Malaysia, the Philippines and Indonesia are also reporting significant illicit trade in tobacco.

The Ceann Comhairle is probably interested in the paper that was written four or five years ago by Klaus von Lampe, Marin K. Kurti, Anqi Shen, and Georgios A. Antonopoulos on the changing role of China in the global illegal cigarette trade. I had raised several times in this House disturbing reports about the role of American tobacco companies in producing illegal cigarettes. However, this role seems to have been taken over by Chinese companies. The paper states:

While previously genuine cigarettes dominated the black market, in the past decade, counterfeit cigarettes have gained a significant market share, with the People’s Republic of China commonly assumed to be the main source [country]. Based on statistics on the seizure of counterfeit cigarettes ... it has been estimated that between 93 [billion] and 186 billion counterfeit cigarettes [were being] produced in mainland China annually ... According to another estimate, the number of fake cigarettes produced in China per year is even higher, reaching 400 billion [sticks].

China’s importance as a producer of what we call "bogey" cigarettes is underscored by seizure data, with the country found to be the ultimate source. I am not sure what they are called in the Ceann Comhairle's local language. Do we know the sources of counterfeit and illegal cigarettes? Why should friendly countries, such as the United States, with which we have close ties, and China, with which we have ever-increasing economic and social ties, send these products here?

I welcome the Bill. I note that section 7(2) places the burden of proof on the purchaser and states: “It shall be presumed until the contrary is shown that the relevant taxes and duties ... have not been duly paid.” That is a good provision. Section 8(1) makes it an offence to purchase alcohol products from a retailer or person who is not on Revenue’s list of current valid liquor licence holders. Section 9 gives powers to the authorised person, including the ability to stop someone he or she reasonably suspects of having purchased illicit goods. Section 11, for which I commend the Deputies, is important as it provides for test purchasing. I have regularly tabled questions to the Department of Justice and Equality about this. We must have test purchasing to ensure we can ascertain the number and location of places selling illicit and counterfeit goods.

I welcome the Bill. It is long overdue, and should make major improvements in the campaign to reduce the illicit trade in tobacco, alcohol and solid fuels, returning trade to smaller retailers, especially those in Border counties as Brexit edges ever closer.

Mattie McGrath (Tipperary, Independent)
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I am happy to contribute to the debate, and I commend Deputy Breathnach and his office on the work that has gone into this legislation. The purpose of the Bill is to provide for the introduction of a series of new measures directed at attacking the trade in illegal alcohol and tobacco. I have some reservations about how it will tackle the trade in solid fuels. We have a huge issue with fuel laundering. For some years I have fully endorsed calls from the British-Irish Parliamentary Assembly, BIPA, of which I am a member, aimed at establishing a dedicated task force to target illicit cross-Border fraud between Northern Ireland and the Republic. It is clear from the information we have that those engaged in cross-Border smuggling of illicit goods such as alcohol and tobacco are essentially acting as economic parasites on our society. I attended a meeting of BIPA last weekend in London. There are huge fears there. I was not able contribute on the post-European Council meetings debate earlier, but there should be no doubt that the British intend on leaving. They will not accept a second referendum like Ireland did. We were given medicine; we did not like the medicine in the first instance so we were given another dose. The British have honour and have respect for democracy, and are leaving Europe, backstop or no backstop. The Taoiseach and the Tánaiste and Minister for Foreign Affairs and Trade, Deputy Coveney, dreamt up a rock-solid, cast-iron guaranteed backstop. Backstop or no backstop, the British are not backing out. They are going forward, not backwards.

Reports indicate that 11% of cigarette consumption in Ireland in one year alone was illicit, and the loss to the Exchequer from tobacco fraud was between €240 million and €575 million.

These are shocking and staggering figures of revenue loss, particularly to a fragile and depressed economy without mentioning the damage some of these products are doing to people's health. It also means vital services are being starved of funding because the tax gain is going to those who operate outside the law. Deputy Breathnach knows more about this living near the Border. I have some experience of it but, as they say, if you want to know me, come and live with me. In light of this, I hope the Minister will fully support an all-Ireland approach to tackling this insidious social evil.

Several weeks ago, the Government was involved in tomfoolery, putting stickers on bottles of beer and other alcohol when it will not deal with real problems. That is the way the Government has gone. It is all shenanigans, antics and spin when it will not properly tackle real problems. The sale of illicit goods has been going on under our noses for decades. If we have anything like a hard border, it will be thriving again.

The cross-Border fuel fraud enforcement group and the cross-Border tobacco fraud enforcement group must receive all the resources necessary to target these organised crime gangs involved in illicit cross-Border trade. They have many friends in here too, compatriots of days gone by. If necessary, these agencies should comprise seconded staff from all relevant agencies, including the environmental and criminal assets recovery agencies, as well as being supported by a central dedicated secretariat. These gangs are almost too powerful to be brought down. Some of them have links, some of which relate to the peace process, meaning these people cannot be reined in because they seem to be above the law. The sooner we tackle them the better. We must support the customs officials and enable those trying to tackle these gangs. Every letter I get as a self-employed businessman has at the bottom of it a warning about a custodial sentence if I do not pay my dues. These people, however, give two fingers to the legislation. Why should they not when the Government is happy to allow them get away with it? All agencies involved should be brought together. It is steps like these, allied to the ones contained in Deputy Breathnach’s Bill, that will finally allow us to make headway on this shadowy matter.

I am concerned about the poor man selling his bags of sticks from the back of a Transit van. He should be supported and left alone. I am reminded of Seamus Moore’s song, “The Transit Van”, about being chased by police cars, turning the van upside down with the wheels spinning. They should be left alone. Instead, the authorities should deal with the high-powered criminals involved in this racket.

Michael Healy-Rae (Kerry, Independent)
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I appreciate the work Deputy Breathnach and his staff have put into this Bill. I bow to his superior knowledge of some of the shadowy acts involved as he lives near the Border.

However, I am not sure about going after the person who might cut a bit of timber, bag it and sell it out of the back of a van. Usually when we hear about something from the back of a van, it means there is something wrong with it. There is absolutely nothing wrong, however, with people getting a bit of fuel like that and delivering it to elderly people’s homes or a customer base which they have set up. It is up to them to keep their own tax affairs in order. However, to brand that activity as illegal is wrong. My late father, Jackie Healy-Rae, would have stood up here to say that he was here for the man selling the bag of turf or the load of timber. I am here tonight to do the exact same thing because those people in my book are respectable, providing a required service in estates or in the countryside and helping older or vulnerable people.

As for fuel laundering, we see these pop-up service stations which do not comply with any regulations. The fuel they are selling is suspect as it can be washed. These activities are backed by organised crime. It is big business and they do not care if they are only operating for a couple of weeks or months because they can make big money in a short time. It is the same as robbing a bank. They are robbing the respectable of people who paid their taxes and are fully tax compliant. They are hurting small businesses. I must declare I am one of those. I have been a fuel retailer for nearly 30 years. I have carbon licences and every other licence I am supposed to have. The last time I counted, I had something like 26 licences to my name, which is a lot. If one is to be compliant, that is what one has to do. I have to pay for every one of them. I will continue to do so as long as I am able to draw breath.

I also sell alcohol and cigarettes. I do not want to see people getting away with that on the black market because they are not paying their taxes. We have to be concerned about the quality of the product. I am sure that within five minutes from Leinster House, one could buy illegal cigarettes. What is in them? Is there rat or other poisons in them?

Last week, we had the ridiculous situation where we were putting labels on beer and whiskey products that are fully above aboard and up to all standards, stating they can cause cancer. Nobody else in Europe is doing this but we are. Of course, we have to be the first do this and give our products a bad reputation. That is why I was totally opposed to it.

The reason I have continually opposed any increase to the cost of cigarettes in budgets is because I believe it only drives people further to purchasing illegal cigarettes.

For God’s sake, the Government cannot go after the man or woman who might be supplementing his or her income a little by selling timber or turf. We cannot throw common sense out the window.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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I call Deputy Browne. Have you ever sold turf out of the back of van?

James Browne (Wexford, Fianna Fail)
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No, I have not.

I am delighted to support the Sale of Illicit Goods Bill and commend my party colleague, Deputy Breathnach, for his work and research in this area. With the House’s support, this Bill will tackle the trade of illegal goods, including the illegal sale of alcohol, tobacco and solid fuel. The Bill intends to make it an offence to buy these goods on the black market from unlicensed retailers among other measures. An on-the-spot fine will be incurred by some purchasers.

Smuggling is a major problem for our economy. I hope the Bill will strengthen our laws with the introduction of measures designed to reduce the demand for these illegal products. The Bill takes aim at the black economy which is estimated to cost the overall economy more than €2.3 billion a year with an estimated loss of €800 million to the Revenue Commissioners. Accordingly, funds for providing necessary services in healthcare, social protection and education cannot be provided. Alternatively, we are losing out on potential for tax cuts which could be provided to help stimulate the economy further.

The black economy is run by criminals. Most of those running these illegal tobacco, diesel and solid fuel sales are criminal organisations, as well as being involved in other criminal activity such as drugs and guns. Recently, 55,000 l of illegal alcohol was seized at Rosslare Europort. Wexford has one of the largest solid fuel wholesalers in the country, Stafford Fuels, which has invested millions of euro into providing smokeless coal and solid fuel which has less of an impact on our environment.

This has been undermined by illegal solid fuel smuggled into the country that does not meet the criteria. We have top-class local merchants in Enniscorthy, including Rowsome's fuels, O'Connor's fuels and Kehoe's fuels, and there are many others throughout the county. These honest decent retailers lose out when illegal solid fuel is brought into the country and sold. As I have said, it supports criminal activity. The Bill goes a long way to help target this. Something desperately needs to be done to target the sale and purchase of these illegal goods. The Bill is very timely with Brexit coming down the line and as it increasingly looks like there will be more smuggling if we are faced with a hard border, which I hope we will not be. I congratulate my colleague, Deputy Breathnach, for bringing it forward.

Fiona O'Loughlin (Kildare South, Fianna Fail)
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By supporting the Bill and endorsing the work put into it by my colleague, Deputy Breathnach, we are absolutely taking a stand that is needed against the sale of illicit goods. The sale of illicit goods on the black market is on the rise. The legislation would particularly tackle the sale of illicit goods such as tobacco, alcohol and solid fuel, and would make it an offence to purchase such illicit goods, particularly from a non-registered or unlicensed retailer. There is absolutely no doubt that the problems we have with smuggling adversely impact small retailers. According to some estimates the black economy costs the overall economy more than €2.3 billion a year and it costs the Exchequer more than €800 million a year. This is an incredible amount of money. We do not know the true figure as, by its very nature, this activity remains unseen. The cost could be far higher. This is more important than ever with the imposition of minimum unit pricing and the increase in excise on cigarettes. The onset of Brexit is also likely have an impact on the black economy.

Instead of focusing on the sellers of such goods the Bill focuses on the people buying these goods when they know or ought to have known they were illegally obtained and illicit. Alarm bells have to go off if people see a lower price than one would normally pay. Under the Bill "illicit" means an alcohol, tobacco or solid fuel product that is counterfeit or where the applicable taxes or duties have not been paid. While An Garda Síochána and the Revenue Commissioners will continue to face down the sellers of these products, by specifically focusing on the purchaser the Bill will act as a deterrent to those who know they are buying illicit goods. The Bill also seeks to instill a behavioural change among purchasers, which is very important. We need to change the culture around these and increase the potential cost of buying these goods.

I also welcome the fact the Bill introduces an on-the-spot fine of €100 for anyone caught purchasing illicit goods from an unregistered or unlicensed retailer. We need to stand by and support the small shopkeepers, retailers and small and medium enterprises. The Bill is certainly a measure to support those who pay their way and pay revenue. They are keeping their businesses going in the communities where they are needed.

John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I thank the Deputies for their contributions to the debate. I believe Deputies on all sides of the House agree that smuggling, the shadow economy and activities in those areas pose a threat to legitimate and compliant businesses and consumers as well as depriving the Government of tax revenues. However, I do not think the solution is to adopt the approach set out in the Bill before the House.

A number of contributors to the debate made reference to reports that have presented estimates of the losses to the economy and the Exchequer caused by smuggling and the illicit trade. I point out, however, that estimating the extent of any illicit activity and the losses to which it gives rise is inherently problematic and must, therefore, be approached with caution. Unless a clear and credible methodology is specified for particular estimates of illicit trade and resulting losses they must be viewed as speculative. Having said that, there is no doubt that such activity impacts on legitimate businesses and Exchequer revenues. This is why Revenue sees combatting smuggling and the illicit trade as a core element of its work.

In tackling the illicit trade, Revenue operates as a fully integrated tax and customs administration. The organisation has more than 2,000 operational staff engaging in activities dedicated to targeting and confronting non-compliance, including activities related to anti-smuggling and anti-evasion, investigation and prosecution, audit, assurance checks, anti-avoidance, returns, compliance, debt collection and recovery. Revenue works closely with the other agencies of the State, including An Garda Síochána, in acting against illegal activities related to smuggling and illicit trade. The relevant authorities in the State also work closely with their counterparts in Northern Ireland to target organised crime groups that are responsible for a significant proportion of smuggling and other illegal activities. This work is supported and facilitated by the joint agency task force, including Revenue, An Garda Síochána and their Northern Ireland counterparts, established in the framework of A Fresh Start - the Stormont Agreement and Implementation Plan. Under the aegis of the task force a very successful joint initiative between Revenue and HM Revenue and Customs directed against suspicious movements of substitute fuel with potential for considerable excise and VAT fraud won the outstanding collaboration category at the UK Government's counter fraud awards in September 2016. From Revenue's perspective, this award recognises the excellent work and co-operation between Revenue and HM Revenue and Customs on investigations into the illegal movement of suspected substitute fuels. There is also close co-operation with relevant authorities in other jurisdictions, including the European anti-fraud office and other international bodies and agencies, in the ongoing programme of action at international level to combat smuggling and the illicit trade.

From a legislative perspective, the Minister has taken action through the Finance Acts over recent years to ensure Revenue has all the necessary powers to act against these forms of criminal activity. He is satisfied that as a result there is a robust legal framework in place that allows effective action to be taken against such crimes. As the Minister has said in the past, he is always open to discussing with Revenue any requirements it may have with regard to resources in the future to maximise its effectiveness in combatting illicit trade.

Shane Cassells (Meath West, Fianna Fail)
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I pay tribute to Deputy Breathnach for bringing forward the Bill. Any of us who grew up in the 1980s had a weekly market. In my case, the weekly market in Navan was a paradise to explore as a young child. One learned fairly quickly that not everything on sale in the market was kosher and one did not have to have watched an episode with Del Boy and Rodney to figure that out. By the time I was a teenager it was the place where one went to go to a certain stall to get fireworks at Halloween. They were discreetly stored underneath the table. For those who partook of cigarettes there was a separate stall that would offer them. Thankfully, it was never a vice to which I fell victim.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Good stuff.

Michael D'Arcy (Wexford, Fine Gael)
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Well done.

John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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A tall chap like you.

Shane Cassells (Meath West, Fianna Fail)
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The impact of the sale of illegal goods in markets and, more particularly, as Deputy Breathnach has said, in large commercial operations, is very real in the sense of the harm it does to people's health in the first instance and, of course, if people are getting them cheaply they will avail of larger quantities, which will do them more harm. From a financial point of view it is harmful to the revenue of the State as it takes from the money required to fund the services the public demand.

From my time on the Committee of Public Accounts during the lifetime of this Dáil that impact was brought home very sharply. The Comptroller and Auditor General produces a special chapter annually on the impact of illegal tobacco sales. The Chairman of the Revenue Commissioners, Niall Cody, has given extensive evidence to the committee on the topic and will do so again in two weeks' time.

Total cigarette consumption in Ireland last year was estimated to be approximately 4.3 billion cigarettes. That, in itself, is staggering. The Minister of State, Deputy Phelan, referred to figures and stated the losses to the Exchequer must be treated as speculative.

7 o’clock

In his latest report on the matter, the Comptroller and Auditor General set out that although the nature of the illicit market in tobacco products makes it challenging to accurately measure the tax losses involved, using the World Bank methodology the number of illegal cigarettes consumed in Ireland last year was estimated to be approximately 13% of the total with a notional loss of revenue to the Exchequer was €229 million. I presume the Minister of State, Deputy Phelan, respects the opinion of the Comptroller and Auditor General. A higher figure was estimated by other groups. KPMG commissioned a report entitled "Project SUN" which indicated that Ireland had the third highest rate of counterfeit and contraband cigarettes in the EU in 2016 at 17.5%.

The illicit tobacco trade is an important source of revenue for international organised crime. In March of this year, Revenue officers seized 23.5 million counterfeit cigarettes in Jenkinstown in the Louth constituency of Deputy Breathnach. The cigarettes were valued at €47.8 million and would have resulted in an estimated loss to the Exchequer of €37.5 million. Unlike the Minister of State, Deputy Phelan, the Comptroller and Auditor General has stated that the figures in this area are real. The Minister of State, Deputy D'Arcy, stated that implementing the provisions of the Bill would prove very difficult. When he considers the figures involved and the matters I have outlined, he must come to the conclusion that the Bill is worthy of consideration because we need to tackle the purchasers of these illegal goods. This illicit trade is a huge problem which is costing us millions.

Jackie Cahill (Tipperary, Fianna Fail)
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I compliment my colleague, Deputy Breathnach, on bringing forward the Bill. He has raised the issue on numerous occasions since he and I entered the Dáil on the same day. As a representative for the constituency of Louth he has intimate knowledge of the issue.

In the context of Brexit and the difficulties which could arise from a hard Brexit, the Bill is extremely timely. It attempts to tackle the illicit sale of goods such as tobacco, alcohol and solid fuel. It seeks to make it an offence to purchase such illicit goods, particularly from an unregistered or unlicensed retailer. According to some estimates, the black economy costs the overall economy €2.3 billion and costs the Exchequer more than €800 million per year. The forgone tax take would cover the overrun in the Department of Health which was discussed yesterday by the Joint Committee on Health. We do not know the true figures for black market trading because by its very nature it remains unseen. The cost to the State, therefore, could be even higher. The measures proposed in the Bill are now even more important in light of the forthcoming minimum unit pricing and the increase in excise on cigarettes. Brexit is also likely to have an impact on the black economy.

Rather than focusing on sellers, the Bill focuses on buyers who know or ought to have known that they were purchasing illicit goods. Under the Bill, "illicit goods" means an alcohol, tobacco or solid fuel product that is counterfeit or in respect of which the applicable taxes or duties have not been paid. While the Garda Síochána and the Revenue Commissioners will continue to face down the sellers of such products by specifically focussing on purchasers, the Bill would act as a deterrent to those who know they are purchasing illicit goods. It seeks to instil a behaviour change among purchasers and to increase the cost of buying illicit goods. It would introduce an on-the-spot fine for anyone caught purchasing illicit goods from an unregistered or unlicensed retailer and make it an offence for a person to buy or attempt to buy tobacco or solid fuel in circumstances where he or she knew or should have known that taxes or excise duties had not been paid. Similarly, it would be an offence for a person to purchase such product if he or she knew or was reckless as to whether the product was counterfeit. It could make would-be purchasers consider the consequences of their actions.

The victims of this illicit trade are the ordinary people of Ireland who are affected by the resultant loss of revenue for the State. Criminals who benefit from the proceeds of such crime are also involved in other criminality more easily recognised as such by the general public. The perpetrators of drug and gun crime are never too far away from the financial opportunities offered by the sale of illicit goods. That makes it essential for legislators to seek to make illicit goods less profitable. We can do so by encouraging the buyers of such goods to turn away from the suppliers thereof. When there is no market, there is no profit and that is what the Bill attempts to achieve.

Declan Breathnach (Louth, Fianna Fail)
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I thank my colleagues in Fianna Fáil and Members of other parties who supported the Bill on Second Stage. It would be easier and, perhaps, more popular to ignore the problem but we must not do so. I acknowledge the great work being done in this area by the Revenue and various other State organisations. I am very disappointed that even after listening to the contributions made on Second Stage, the Government - Fine Gael in particular which is often referred to as the party of law and order - cannot appreciate that this issue will not go away but, rather, will get worse and worse.

The framework of the Bill was drawn up by a barrister. Many may disagree with some of its provisions. We often use the phrase "doctors differ and patients die". People have different opinions. Much time and work was put into the Bill but there are flaws in it, as highlighted in some of the contributions in the House tonight. I appeal to the Government to allow the Bill to go to Committee Stage where the issues raised by Members across the House can be dealt with and we will be able to come up with a solution to what is a massive issue in this country.

Billy Kelleher (Cork North Central, Fianna Fail)
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Hear, hear.

Declan Breathnach (Louth, Fianna Fail)
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I challenge the Revenue, customs, the Garda, the PSNI and all of the agencies involved to pay heed to what has been said here and get involved on Committee Stage to ensure we stop such illicit trade.

I wish to bring some light-heartedness to the discussion. Deputy Mattie McGrath referred to "The Transit Van" by Seamus Moore. Another song of his which is well known in my region is "Flash The Lights At Me" which refers to the well-known tradition of telling drivers to watch out ahead.

We’re crafty ’round the border, that’s how we have to be

We like to get the better of the customs and authority

We can barely forge, we know the score, we’ve a simple philosophy

If the thing’s not right day or night, won’t you flash the lights at me.

It sums up this illegality in a light-hearted way.

I appeal to the Government to allow the Bill to progress to Committee Stage. It has support across the House. Many of the issues raised tonight could be dealt with on Committee Stage when counter-arguments could be put forward. I prepared a response on several of the issues raised but do not have sufficient time to outline it. It is incumbent on all Members to at least address this issue and find a solution to what is not an easy problem but can generate revenue for the State. I came to this House to try to make a difference, as did all Members. The Government must stop ignoring that we have a problem and, rather, find a solution to it. Anything can be improved if the will to do so is there. The Government should not oppose the Bill but, rather, allow it to progress to Committee Stage.

Billy Kelleher (Cork North Central, Fianna Fail)
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Hear, hear.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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The division is postponed until the weekly division time on Thursday, 25 October 2018 in accordance with Standing Order 70(2).