Jackie Cahill (Tipperary, Fianna Fail)
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I thank the Minister of State for being in the Chamber to discuss this issue. Last week, I met a delegation of solid fuel merchants who are members of a newly formed organisation. Every town and village in the country has a fuel merchant. Unfair competition is shattering their trade. Approximately 50% of the coal that is being used in the country is coming down from Northern Ireland. It is estimated that €100 million worth of coal products will come from the Six Counties into the Twenty-six Counties this year. For better or worse, we have a carbon tax in this country. VAT is also applied to solid fuel products. That puts our fuel merchants in a completely unviable situation whereby they are not able to compete with the products coming from Northern Ireland. Those products are not subject to carbon tax and VAT in the same way as products sourced in the Twenty-six Counties. The vast majority of the products coming down are illegal to be used in the South. Smoky coal is the principal such product. It has been banned in the Twenty-six Counties. Smoky coal is coming down from Northern Ireland in very large quantities nonetheless.

Carbon tax increased again on 1 May and added 90 cent to the cost of a bag of coal. We know that carbon tax is a climate action measure and we are not here to argue about the carbon tax. This is about a level playing field. Unfortunately, there is no surveillance of where products are coming from at the moment. Three recommendations have been made to me by the fuel merchants. The first is that a mandatory licence should be put in place for all fuel merchants. They feel that is the first requirement to bring some regulation to the business. It is unusual for businesses to look for regulation but in this case, the fuel merchants feel their very survival depends on it. If there is no licensing system in place, they do not know how the products coming down from the North can be controlled.

The second recommendation is that if there is licensing in place, all fuel merchants' premises should be open to inspection.

Again, if they are open to inspection and there was illegal product on the premises, that would be seen. If the product was sourced from outside our jurisdiction, that would come to light during the inspection. That would have to bring transparency and fairness to the trade. The third request is that there would be Road Safety Authority, RSA checks on vehicles carrying fuel around the country.

At the moment. we have articulated trucks coming down from the North and couriers also with single axle lorries bringing down significant quantities of solid fuel. There are no checks at any stage on them. We need to have checks on these and if we had the licensing system in place and the inspection regime; if someone is carrying product that is not legal in this country, that would be confiscated.

If there were a number of these checks on roads around the country, we would very quickly see a reduction in illegal products coming into our jurisdiction.

As it stands, fuel merchants are facing completely unfair competition. They will not survive and will go out of business. We have seen some large fuel merchant firms announcing their closure in the past number of weeks. This is getting worse by the week where there is more and more product coming down from the Six Counties and we have to have a level playing field. The product that is sold here has to be legal and has to be subject to the same taxation regime.

Josepha Madigan (Dublin Rathdown, Fine Gael)
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I thank the Deputy for raising this issue. It is important to acknowledge that, currently, solid fuels are generally cheaper in Northern Ireland than in the State. This, unfortunately, is a matter over which the Government has no control. The price differentials arise for several reasons, including the lower VAT rate and the absence of a carbon tax in Northern lreland, which has been mentioned by the Deputy. In addition, the much less stringent environmental standards applying to solid fuels in Northern Ireland allow for the sale in that jurisdiction of lower quality solid fuels, which can be significantly cheaper than solid fuels that meet the required environmental standards in this State. This is particularly relevant with regard to coal as there are no restrictions in Northern Ireland on the sale or use of smoky coal, which is significantly cheaper than smokeless coal.

Revenue has responsibility for administering and enforcing the solid fuel carbon tax, which is an excise duty that applies to solid fuels such as coal, when they are first supplied in the State. I am aware that the Deputy has no issue with the carbon tax collected by Revenue on a self-assessment basis. Compliance with it is enforced using the full range of compliance interventions and enforcement provisions for self-assessed taxes.

VAT applies to supplies of solid fuels in the State in line with EU VAT law, with which Irish VAT law must comply. In accordance with the EU VAT directive, the supply of coal and other solid substances offered for sale solely as fuel are subject to the reduced rate of VAT, currently 13.5%. Liability to solid fuel carbon tax arises when solid fuel is first supplied in the State, which means that neither the movement of solid fuel into the State, nor its physical presence in the State, generate a solid fuel carbon tax liability.

In addition, EU Single Market constraints preclude the use of any EU cross-border controls in the administration of solid fuel carbon tax. As such, coal coming into the State from other member states and Northern Ireland is not subject to cross-Border movement controls typical of harmonised excises on mineral oils, tobacco and alcohol. There is no requirement for such movements of solid fuel to be declared to Revenue, nor is there any requirement for solid fuels to enter tax warehouses or a duty suspension regime. Essentially, solid fuels being brought into the State from Northern Ireland enjoy the same freedom of movement that applies to most other goods. Revenue has no authority to challenge transportation or possession of solid fuel that originated in Northern Ireland, as such transportation or possession are not, in themselves, Revenue offences.

Suppliers making first supplies of liable solid fuel in the State must register with Revenue. In the main, the obligation to register for solid fuel carbon tax applies to solid fuel importers and manufacturers based in the State. However, suppliers based outside the State must register with Revenue and pay solid fuel carbon tax where they deliver solid fuel into the State to a private individual. This means that suppliers from Northern Ireland, who take orders for delivery to private individuals in the State, are liable for solid fuel carbon tax and must register with Revenue. Approximately 5% of carbon tax registrations are suppliers based in Northern Ireland.

While Revenue cannot impose any obstacles to the free movement of solid fuels into the State from other member states and Northern Ireland, such imports are open to challenge by local authorities under the State's environmental standards regulatory regime. The Air Pollution Act 1987 (Solid Fuels) Regulations 2022, which were implemented in October last year, significantly enhanced the State's regulatory regime underpinning environmental standards for solid fuels. The regulations empower local authorities to take enforcement actions, including prosecutions, against solid fuel producers, importers, distributors, retailers and users to ensure all solid fuels placed on the market and used in the State comply with relevant standards. The regulations place specific obligations on anyone transporting solid fuels with accompanying documentation, detailing fuel source, destination and compliance with environmental standards, being required to be available for inspection by local authority staff.

I may read the rest of my contribution into the record when I speak again.

Jackie Cahill (Tipperary, Fianna Fail)
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I thank the Minister of State for her reply. Specifically, solid fuels being brought into this State from Northern Ireland enjoy the same freedom of movement that applies to most other goods. How can she expect a carbon tax to operate in the Twenty-six Counties if we have product coming from outside the State which is coming in and undermining business here? That just cannot be allowed to continue. The estimated figures from the fuel merchants I have for loss of revenue in 2023 is €77 million.

Leaving that aside, we will lose our complete infrastructure of fuel merchants in this country and it is happening as we speak here. They are going out of business.

The reality is, and the Minister of State has said it in her statement, that much of this product which is coming down from the North of Ireland is illegal to be sold here. An inspection regime has to be put in place. I will repeat the three requests I have. These are: fuel merchants here have to be licensed; they have to be open for inspection; and there has to be checks on product being moved from one place to the other within the State to see if the product on those trucks and lorries is legal. That has to happen immediately.

We will have more and more of this issue in the post-Brexit period where the standards in the Twenty-six Counties and the standards in the UK and in Northern Ireland will be different from our own on different products. We cannot allow the homegrown businesses in this country suffer because of that. That is what is happening at the moment. We have different standards, a different rate of taxation, and the fuel merchant businesses are being completely undermined and will become completely unviable. We must impose the same standards where product coming down from the North will most definitely have to be legal and, if it is being used in this country, it must be subject to carbon tax to ensure a level playing field for our fuel merchants here to ensure fairness. This is also to ensure that the environmental improvements which we are trying to achieve from carbon tax do actually happen.

Josepha Madigan (Dublin Rathdown, Fine Gael)
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I thank the Deputy. It is acknowledged that a price differential arises in retail sales of coal between the State and Northern Ireland owing to the lower VAT rate, absence of a carbon tax and much less stringent environmental standards applying to solid fuels in Northern Ireland. Revenue staff have participated in a number of joint operations with local authorities' solid fuel inspection teams, with a view to checking for compliance under several tax headings, and is currently actively engaging with local authorities with a view to participating in future joint operations.

The solid fuel carbon tax is not an import duty and applies when solid is first supplied in the State. Neither the movement of solid fuel in the State nor its storage in the State generate a liability to carbon tax. It is only when solid fuels are first supplied in the State that a solid fuel carbon tax liability arises.

Regarding the Deputy's question on legislation to empower Revenue to prevent smoky coal being brought into the State from Northern Ireland, solid fuels, including all types of coal, as he knows, are not subject to the EU-wide control and movement regime. Under the Treaty on the Functioning of the European Union, a member state may not apply any barriers to the free movement of solid fuel into the State from other member states, including Northern Ireland. Revenue, therefore, cannot prevent smoky coal from entering the State under tax law.

Local authorities, nevertheless, have significant powers under environmental law, namely the new solid fuel regulations, to enforce the legal provisions aimed at preventing the marketing, distribution, sale and use of smoky coal in the State. The Deputy met a delegation of solid fuel merchants. Revenue officials would be happy to meet solid fuel supplier representative bodies and would be particularly interested in gathering any information on suspected tax evasion. They always welcome any information that representative bodies, suppliers or individuals may wish to share confidentially.