Charles Flanagan (Laois-Offaly, Fine Gael)
Link to this: Individually | In context

Question 84: To ask the Minister for Finance if his attention has been drawn to the fact that the average fine for handling illegal cigarettes was €423 during the first three months of 2009 while at the same time, seizures of illegal and counterfeit cigarettes has jumped from 826 million cigarettes in 2007 to 134 billion in 2008 costing the tax payer more than €500 million; his views on whether a new Garda and customs operation needs to be set up to target smuggling and on whether tougher penalties are required; and if he will make a statement on the matter. [35772/09]

Charles Flanagan (Laois-Offaly, Fine Gael)
Link to this: Individually | In context

Question 128: To ask the Minister for Finance if his attention has been drawn to the way the illicit cigarette trade problems here compare to the rest of the EU in view of the recent seizures of cigarettes at Dublin Airport and other ports here; and if he will make a statement on the matter. [35770/09]

Charles Flanagan (Laois-Offaly, Fine Gael)
Link to this: Individually | In context

Question 129: To ask the Minister for Finance if he has access to reports that show the trends here over recent years regarding the illicit cigarette trade; the way these trends, facts and figures compare to the rest of the EU member states; and if he will make a statement on the matter. [35771/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I propose to take Questions Nos. 84, 128 and 129 together.

I am informed by the Revenue Commissioners that the European Anti Fraud Office (OLAF) has a special unit entitled OLAF Task Group Cigarettes, which co-ordinates both international operations and other countermeasures undertaken by the authorities of the Member States against cigarette smuggling. The OLAF also maintains a database of cigarette seizures reported by the authorities of the Member States. In this regard, the number of cigarettes seized by Ireland in 2008 was 10th in the table of seizures. This is the only data available to the authorities for comparison between the Member States.

I am aware that a report commissioned by a major international cigarette manufacturer has been compiled annually in recent years and contains estimates of the illicit trade in each Member State. This report is provided on a confidential basis to the individual tax authority of each Member State in respect of themselves only. The Revenue Commissioners advise that it is a subjective assessment of the situation which relies heavily on empty pack surveys that are merely an indicator of the presence of untaxed product in a market but do not differentiate between smuggled product and legal cross-border purchases. It is also difficult to extrapolate the results of empty pack surveys to calculate the overall level of infiltration of the market by contraband product.

It is, in any event, difficult to make meaningful comparisons between cigarette seizures by different Member States. This is because a variety of factors need to be taken into account including population, geographical location, the level of cigarette taxes imposed and how this compares with neighbouring countries; whether a transit country or country of destination is involved, accessibility by air, sea or road etc. The modus operandi of smuggling illicit cigarettes in maritime freight is quite similar across the EU while "ant smuggling" (high frequency/low volume movements) is generally concentrated at the external EU land boundary. Ant smuggling by travellers by air seems to be concentrated in Ireland, probably due to the availability of frequent, low cost flights from Eastern Europe where cheap tax-paid cigarettes are freely available.

The methods used by the Customs Services throughout the EU to tackle cigarette smuggling are similar and involve a combination of detection, seizure and prosecution using an amalgamation of profiling, intelligence gathering, co-operation between Customs Services and scanning. In this regard, Revenue acquired its first mobile container scanner in 2006 and I was pleased to be in a position to provide funding this year towards the cost of a second mobile scanner, which is due to arrive in Ireland next month.

Revenue works closely with the legitimate tobacco industry. 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. Revenue also works closely with the local tobacco industry and the Irish Tobacco Manufacturers Advisory Committee (ITMAC) with a view to identifying illicit cigarettes on sale in the State and current trends and trading patterns. In addition Revenue co-operates and shares information with the Office of Tobacco Control (OTC).

As regards the question of the need for a multi-agency approach to tackle cigarette smuggling, I am advised that there is excellent co-operation and sharing of information between Revenue and An Garda Síochána and, where appropriate, these two agencies participate jointly in major anti-smuggling operations. In the case of cross-border operations, the PSNI and HMRC are also involved.

The penalties for cigarette smuggling provided under legislation on summary conviction, are a monetary fine not exceeding €5,000 and/or a custodial sentence not exceeding 12 months. These are the maximum penalties that can be imposed at District Court level. The penalties for conviction on indictment are €12,695 or treble the duty-paid value, whichever is the greater, and/or a custodial sentence not exceeding 5 years. These penalties are considered adequate. Of course, as the Deputy is aware, the precise penalty imposed on conviction in each individual case is a matter for the Court. I am informed by the Revenue Commissioners that during the first 9 months of 2009, there were 92 convictions for cigarette smuggling and 9 convictions for selling untaxed cigarettes. In the case of cigarette smuggling, custodial sentences were imposed in 18 cases, of which 9 were suspended; Community Service Orders were imposed in 5 cases and over €40,000 in fines were imposed in the remaining cases. In the case of illegal selling, over €20,000 in fines were imposed in 8 cases, while a suspended sentence was imposed in the remaining case. In relation to the seizure statistics quoted, it should be noted that 74.5m cigarettes were seized in 2007 and 135.2m in 2008.