Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank Senators for allowing me the opportunity to address the report of the British-Irish Parliamentary Assembly on cross-Border police co-operation and illicit trade. I was pleased to meet the members of the assembly during its recent meeting in Dublin at which the report was discussed. I acknowledge the work of my colleague, Senator Paul Coghlan, who was co-author of the report and chairman of Committee A of the assembly which examined this issue and Senator Jim Walsh who is also a member of the committee.

I welcome the finding of Committee A that the current level of co-operation between An Garda Síochána and the Police Service of Northern Ireland, PSNI, is excellent, with evidence that both police fores are working closely together, formally and informally, on many issues. I also welcome the committee's conclusion that the joint cross-Border policing strategy, first launched in 2010, has contributed to the detection of criminal activity and better public safety across the island of Ireland by enhancing the policing capabilities of both police services. Also welcome is the committee's third finding that an all-island approach is necessary to tackle cross-Border illicit trade. In this context, I note the committee's welcome for the establishment since its last inquiry of the multi-agency, cross-Border fuel fraud enforcement group and the cross-Border tobacco fraud enforcement group. The three findings of the committee give us all cause to be pleased.

The report goes into some detail on the issues of fuel fraud and tobacco smuggling. While acknowledging the collaborative work done by the relevant agencies in tackling this issue, it expresses concern at ongoing activity in this regard. I join the committee in its commendation of the co-operation between the Revenue Commissioners and Her Majesty's Revenue and Customs on their efforts in tackling these issues. In recognition of the fact that fuel fraud, including the laundering of markers from rebated fuel, is a significant threat to Exchequer revenues, Revenue is implementing a comprehensive strategy to address the problem. The licensing regime for auto fuel traders was strengthened with effect from September 2011 to limit the ability of criminals to place laundered fuel on the market. In October 2012 a new licensing regime was introduced for marked fuel traders to limit the ability of criminals to source marked fuel for laundering. In addition, new requirements in regard to fuel traders' records of stock movements and fuel deliveries have been introduced to ensure data will be available to support supply chain analysis. Following a significant investment in the required information technology systems, new supply chain controls were introduced from January 2013 to require all licensed fuel traders, whether dealing in road fuel or marked fuel, to make monthly electronic returns of their fuel transactions to Revenue. These data are being used to identify suspicious or anomalous transactions and patterns of distribution that will support follow-up enforcement action, where necessary.

Close co-operation in the framework of the cross-Border fuel fraud enforcement group with other enforcement authorities in this jurisdiction and Northern Ireland in combating the all-island problem of fuel fraud has proved effective in supporting the identification and targeting of the organised crime groups, many with links to paramilitaries and former paramilitaries, which are responsible for the bulk of fuel fraud. Following a joint process, Revenue and Her Majesty's Revenue and Customs have identified a new and more effective product to mark rebated fuels. The new marker will be produced by the Dow Chemical Company and introduced in this state and the United Kingdom from the end of this month, providing a significant boost in the fight against illegal fuel laundering in both jurisdictions.This has provided a significant boost, which I am sure Senators will welcome, in the fight against illegal fuel laundering in both jurisdictions. In addition, the Government has introduced a range of legislative measures in recent years to support Revenue's work in fighting fuel fraud, including reckless trading provisions, to ensure that a mineral oil trader is liable for the tax evaded where he or she knew or was reckless as to whether he or she was participating in a transaction or series of transactions connected to the evasion of the mineral oil tax. The Finance Act 2014 introduced measures to further strengthen Revenue's ability to refuse or revoke a mineral oil trader's licence where the trader does not comply with excise law, does not maintain adequate stock management systems and records, or provides false and misleading information.

I am pleased to report that Revenue's strategy has yielded significant results, and the report outlines its success in terms of fuel seizures and filling stations being shut down. Since mid-2011, 134 filling stations were closed for breaches of licensing conditions. More than 3 million litres of oil have been seized and 31 oil laundries were detected and closed. Industry sources report a much reduced incidence of laundered fuel on the market, and road diesel consumption and tax revenues have risen significantly compared with a couple of years ago. Despite the alarm expressed by the committee at the level of activity, the reports of a decrease in activity are to be welcomed. We should not be complacent, however. Other economic factors have contributed to the growth in diesel consumption but reduced fraud is also an important factor. I am confident that the introduction of the new marker from the end of the month will copper fasten the work already done in this area.

The committee's report referred to the impact of the illicit tobacco trade on legitimate business and the Exchequer. Combatting illegal tobacco trade will continue to be a high priority for Revenue. Its work to deal with this illegal activity includes a range of measures designed to identify and target those who engage in the supply or sale of illicit products, with a view to seizing the products and prosecuting those responsible. This multifaceted strategy includes: ongoing analysis of the nature and extent of the problem; developing and sharing intelligence on a national, EU and international basis; use of analytics and detection technologies; and ensuring the optimum deployment of resources at points of importation and within the country. Revenue officers also target the illicit trade at the post-importation stage by carrying out intelligence-based operations and random checks of retail outlets, markets and private and commercial premises. The annual survey conducted for the HSE and the Revenue Commissioners by IPSOS-MRBI indicates that 11% of cigarettes consumed in Ireland in 2013 were illicit. The survey results for 2009, 2010, 2011 and 2012 indicated illegal consumption rates of 15%, 14%, 14% and 13%, respectively. The Revenue Commissioners will continue to make tackling the trade in illicit tobacco products a key objectives and the Government will ensure that any legislation action required to combat illicit tobacco trade is taken.

Revenue co-operates extensively with An Garda Síochána in combatting this illicit trade, and the relevant agencies in this State also work closely with their counterparts in Northern Ireland through a cross-Border initiative on tobacco enforcement to target the organised crime groups which are responsible for a large proportion of the illegal tobacco market. In addition, there is ongoing co-operation at international level with other revenue administrations and the European Anti-Fraud Office, OLAF.

The report refers to the resources committed to tackling the illicit trade in tobacco products. The Revenue Commissioners have 2,000 staff who are engaged in activities dedicated to targeting and confronting non-compliance. These frontline activities include anti-smuggling and anti-evasion, investigation and prosecution, audit, assurance checks, anti-avoidance, returns compliance and debt collection. The organisation was subject to the staffing reduction imposed on all public bodies since 2009 and its overall staffing levels have decreased from 6,581 full-time equivalents at the end of 2008 to the current 5,661. Notwithstanding this reduction, Revenue staff resources assigned to compliance activities have been maintained. This is an indication of the priority the Government and Revenue attach to combatting illicit trade. The Revenue Commissioners are committed to ensuring that, despite staffing reductions in general across the organisation, enforcement work will be resourced to the maximum extent possible.

I again thank Senators for allowing my the opportunity to address the report by the British-Irish Parliamentary Assembly on cross-Border police co-operation and illicit trade. I commend the members of Committee A of the assembly for their excellent and timely work on an issue that is important not only in terms of criminal and justice matters but also, from the perspective of the Department of Finance, the Exchequer and Irish taxpayer. I have outlined the many administrative and legislative measures that have been introduced in recent years to tackle cross-Border illicit trade. These measures are, thankfully, achieving success. The assembly recognised the excellent ongoing co-operation between the Garda and the PSNI and the benefits arising from the cross-Border policing strategy. It is important that we do all we can to strengthen that relationship. I assure Senators this Government will not take anything for granted. We will continue to do what we can to improve the situation. To this end, the assembly has offered interesting recommendations and insights which will be considered by officials in the Department of Finance and the Revenue Commissioners in advance of the upcoming Finance Bill.