Written answers

Wednesday, 23 September 2009

9:00 am

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
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Question 80: To ask the Minister for Finance if, in respect of Article 325 of the Lisbon treaty which relates to combating fraud, he will confirm the way he proposes to protect the financial interests of the European Union and Ireland's own financial interests as part of the Lisbon treaty with respect to the illicit trade of tobacco here; if his attention has been drawn to the fact that the illicit trade of tobacco cost the Exchequer €387 million in 2008 and is estimated to cost close to a half billion euro in 2009; and if he will make a statement on the matter. [32699/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners, who are responsible for enforcement and investigation associated with the illicit trade in cigarettes, that, in addition to the wide range of enforcement measures undertaken at national level, they actively engage on an ongoing basis with the European Anti-Fraud Office (OLAF) and also with other Customs Administrations in the Member States on the matter of cigarette smuggling. OLAF has set up a special task force titled Task Group Cigarettes for this purpose.

Cooperation in this field includes: conducting and assisting in international investigations, often co-ordinated and supported by OLAF; undertaking controlled deliveries of commercial consignments of illicit cigarettes detected, involving one or more Member State; participating in Joint Customs Operations with the Member States, co-ordinated by OLAF.

In addition, Ireland, along with the other Member States, has ratified two international agreements concluded by OLAF with global cigarette manufacturers, Philip Morris International and Japan Tobacco International, with a view to tackling the illicit trade in counterfeit and contraband cigarettes.

As regards the estimated cost to the Exchequer mentioned, I am informed by the Revenue Commissioners that they are not in a position to confirm the estimate of tax loss from cigarette smuggling in 2008 or to attempt to forecast the tax loss on cigarettes in 2009, as there is no reliable method for determining these figures. However, the figure mentioned of €387m for 2008 is equivalent to approximately 20% of the market and Revenue would tentatively accept that this is a reasonable estimate of the amount of untaxed cigarettes consumed in Ireland during the year. It is however important to note that this estimate includes legal cross-border shopping purchases for personal consumption along with smuggled counterfeit and contraband cigarettes.

In relation to the estimate for 2009, the only precise information that Revenue can confirm is the volume of cigarettes on which excise duty is charged and the number of cigarettes seized by customs. Cigarette clearances on payment of tax in the first eight-month period ending August 2009 are around 2,892.7m, down 10% on the same period in 2008. Some 60.7m cigarettes with a retail value of approximately €25.6m were seized during the first eight months of 2009. This can be compared to a total number of around 135.2m cigarettes with an estimated average retail value of €54.4m, seized in the twelve months of 2008.

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