John O'Mahony (Fine Gael)
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I welcome the Minister. I call Senator Frank Feighan. The Senator has four minutes.

Frank Feighan (Fine Gael)
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I will address the need for the Minister for Finance to ensure all necessary resources are available to the Revenue Commissioners in order to protect the livelihoods of solid fuel traders located near the Border in light of the price differential in the North and the continued threat of fuel smuggling.

I thank the Minister for coming before the House today. I am glad to get the opportunity to raise this issue on what has become an increasingly serious problem for many small businesses operating within close proximity of the Border. In recent weeks, I spoke to businesses and families in north Roscommon and south Leitrim who make their living from the solid fuel trade and who are increasingly worried about real threats to businesses and jobs. There is growing anecdotal evidence to suggest that the solid fuel trade this side of the Border has been affected by a combination of cheaper prices for similar products in the North, and fuel smuggling. To give an example of the current risks posed, a standard truck bringing 20 tonnes of coal from Northern Ireland across the Border without the application of carbon tax can bring a saving of almost €1,200. How can a legitimate business compete south of the Border with such a price differential? That is without even applying the difference in VAT between the two jurisdictions, which would increase the margins further for legal traders. This price differential is also significant when it comes to briquettes and turf because, again, no carbon tax is applied to these fuels north of the Border. This unacceptable situation is not just detrimental to local businesses located in the Border region, but the Exchequer is also essentially robbed of tax income as a result.

In light of these real threats to businesses and jobs, I ask the Minister if he is satisfied that there are enough safeguards in place to protect legal traders this side of the Border. Are we satisfied that there is a fully co-ordinated approach between Revenue, its UK equivalent, the Garda, the Police Service of Northern Ireland, PSNI, and other relevant agencies to crack down on these rogue traders? It goes without saying that we must do everything possible to catch these perpetrators, which are damaging legitimate business. Many of these legitimate businesses are based in rural Ireland and provide vital jobs for local economies. Retail Excellence Ireland, the representative organisation supporting Irish retailers, recently highlighted that €2.35 billion has been lost to the Irish economy as a result of smuggling in general. This is not just to do with fuel. It also says that there is deep concern within the fuel industry regarding the influx of illegal sales. Retail Excellence Ireland has always said that it has received reports that gangs, courtesy of our good road network, are travelling across the country selling illegal fuel.

There is also another sinister dimension to this which could have health consequences for consumers. Retail Excellence Ireland also say that counterfeit coal bags are being used and that these contain coal which is unsafe because it has a higher sulphur content and can, as a result, be explosive. Brexit is highlighted almost daily as another factor creating much uncertainty for businesses along the Border. It is another concern that legal solid fuel traders have to contend with. I cannot over-emphasise the need to eliminate all threats to small businesses based in the Border region. To protect our solid fuel traders we must ensure that the crackdown on fuel smuggling is as rigorous as possible. Otherwise, these traders will be forced to close their doors for good with the loss of many jobs. We simply cannot allow that to happen.

Michael Noonan (Limerick City, Fine Gael)
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I thank the Senator for his contribution and comments. I welcome the opportunity to highlight some important points on this matter.

The background is that the solid fuel carbon tax, SFCT, was provided for in the Finance Act 2010 and was commenced on 1 May 2013. The introduction of the solid fuel carbon tax was delayed to allow for a mechanism to be put in place to address the risk of coal products with lower environmental standards being sourced from outside the State. Regulations to enable local authorities to regulate and control the type of coal supplied in the State were put in place by the Minister for the Environment, Community and Local Government. The rate of tax is currently based on a charge of €20 per tonne of carbon dioxide emitted from the fuel concerned. This equates to €52.67 per tonne in the case of coal and ranges from €17.99 to €36.67 per tonne for peat and peat-based fuel products.

The yield from the solid fuel carbon tax in 2016 was in excess of €24 million. Revenue has responsibility for administering the solid fuel carbon tax and, as it does with all taxes and duties, takes a risk-focused approach in its deployment of resources on compliance activities.

Currently, there is no carbon tax on domestic solid fuel in Northern Ireland. This factor, combined with that jurisdiction's lower VAT rate on solid fuel and currency fluctuations, can give rise to significant price differentials for solid fuel between this State and Northern Ireland.

The solid fuel carbon tax applies on the first supply of coal and peat in the State and the tax is payable, on a bi-monthly basis, by a taxable person who is registered for VAT and making a first supply. Every supplier who intends to make a first supply of solid fuel in the State must register with Revenue. This obligation includes suppliers based in Northern Ireland who deliver solid fuel into the State to a private individual. However, solid fuel carbon tax is not payable by a Northern Ireland supplier where that supplier makes the supply at the premises in the North, nor is it payable by private individuals travelling to the North to buy solid fuel for personal consumption if the individual accompanies the fuel back into the State.

Revenue collects this tax on a self-assessment basis and enforces compliance by way of audit of solid fuel carbon tax returns. It is important to note that European Union Single Market constraints preclude the use of any cross-border movement controls in the administration of the solid fuel carbon tax. Therefore, Revenue has no authority to stop vehicles and physically inspect loads of solid fuel. Similarly, the transport or possession of solid fuel that originated in Northern Ireland are not, in themselves, Revenue offences and Revenue's officers have no authority to challenge such transportation or possession.

Collection of solid fuel carbon tax is heavily reliant on the regulatory regime for solid fuel established by the Department of Communications, Climate Action and Environment and enforced by local authorities. This regulatory framework covers the marketing, sale, distribution and burning of solid fuels in the State and sets out particular environmental standards for coal supplied in the State. These environmental standards are higher than those that apply in Northern Ireland. The regulations provide for the enforcement of the relevant environmental standards by local authorities. Local authorities have powers to inspect premises and vehicles being used for the sale and distribution of solid fuel; collect samples of coal to check for adherence to environmental standards; and prosecute traders involved in selling illicit coal. The regulations also provide for the establishment of a register of coal suppliers by the Environmental Protection Agency.

I am aware of concerns expressed by solid fuel traders, especially those located near the Border, relating to untaxed coal entering the State. My officials will continue to engage on this matter with the Department of Communications, Climate Action and Environment. As I have outlined, that Department is responsible in the first instance for regulating solid fuel in the State.

Frank Feighan (Fine Gael)
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I thank the Minister for coming to the House and outlining the position. I urge the Minister to continue to engage on this matter with the Department of Communications, Climate Action and Environment. We all know that Department is responsible for regulating solid fuel in the State. The Minister is aware, as are many other Members of the Houses of the Oireachtas, that this issue is ever-growing. Where there is a border, such difficult situations arise. I thank the Minister again.

Michael Noonan (Limerick City, Fine Gael)
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As I have said earlier, it was important that the regulatory framework to control the sale and burning of solid fuels in the State was in place before the introduction of the carbon tax on solid fuel. The framework is in place now, as are the environmental standards for coal supplied in the State. The enforcement of these environmental standards is the responsibility of local authorities. Local authorities have powers to inspect vehicles and premises being used for the sale and distribution of solid fuels. It seems, therefore, that there needs to be a tightening up of the inspection and standards at local level. This is a matter for the local authorities as the powers of inspection have been given to them under the regulations. For my part, I will instruct my officials to continue to engage with the Department of Communications, Climate Action and Environment in this regard.