Jimmy Deenihan (Kerry North, Fine Gael)
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Question 256: To ask the Minister for Finance his views on the increasing level of tobacco smuggling here, the resulting loss of revenue to the Exchequer and loss of jobs in the retail sector; and if he will make a statement on the matter. [37982/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I wish to assure the Deputy that my Department and I, and also the Revenue Commissioners, who are responsible for the collection of tobacco products tax and tackling the illicit trade in cigarettes and tobacco products, are concerned at the current level of cigarette smuggling. In this regard it is generally accepted that the high level of taxation levied on cigarettes in Ireland makes it a target for smugglers despite the comparatively small size of the market. This problem is exacerbated by the downturn in the economy which undoubtedly puts greater pressure on tax collection.

There is no internationally recognised method for determining the amount of tax lost as a result of the illicit trade in cigarettes. I am aware of various media reports based on tobacco industry statements that indicate that the level of cigarette smuggling is on the increase. However these are largely based on empty cigarette pack surveys that are at best an indicator of the presence of untaxed cigarettes on the market but are unreliable as a method of determining estimates of smuggling levels as they do not distinguish between illegal (smuggled) cigarettes and legal cross-border purchases imported for personal consumption.

The Revenue Commissioners have previously given a tentative estimate that approximately 20% of cigarettes consumed in Ireland in 2008 were untaxed in Ireland. It is important however, to emphasise that this estimate includes both illicit cigarettes and legal cross-border purchases brought into the State for personal consumption.

I am also informed by the Revenue Commissioners that current strategies to deal with the problem are under continuous review. This includes monitoring importations, reviewing profiling techniques and container scanning operations, exchanges of information with Customs Services in other Member States and the European Anti- fraud Office (OLAF), joint operations with the Gardai, co-operation with the legitimate tobacco industry and with the Office of Tobacco Control. I might add that a second mobile container scanner has been purchased and is due to arrive in Ireland before the end of this month. This scanner is expected to increase the overall level of detection at our major ports. Already this year almost 200m cigarettes have been seized. These include cigarettes seized in maritime freight and from passengers arriving by air. They also include the recent seizure on 27 October 2009 of an estimated 120m cigarettes concealed in animal feed that were seized at Greenore Port from the vessel MV Anne Scan following a multi-agency operation. This investigation is ongoing with follow-up investigations in the Philippines being co-ordinated by OLAF. The seizure statistics also include 8.6m cigarettes seized in the course of 190 seizures made inland at retail outlets, markets and distribution centres.

In addition, there have been 101 convictions for cigarette smuggling or dealing in smuggled cigarettes during the first nine months of 2009. A significant number of other cases are already before the Courts awaiting hearing or are being processed for prosecution.

As regards the loss of jobs in the retail sector, while legitimate retailers undoubtedly suffer some drop in business due to competition from the illicit trade in contraband or counterfeit cigarettes, it is difficult to attribute job losses in supermarkets, retail shops and shops in filling stations where cigarettes are normally purchased, solely to cigarette smuggling.