Written answers

Wednesday, 26 May 2010

Department of Finance

Tobacco Smuggling

10:30 am

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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Question 140: To ask the Minister for Finance if he will indicate his estimate of tobacco consumption here on which duty has not been paid; the estimated loss to the Exchequer over a 12 month period; the scale of the revenue loss; if the 27% smuggled product estimated by the trade is accurate; and his views on whether further scanning machines would be a cost effective investment based on his estimate of the cost of installing one more scanner. [22154/10]

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 the collection of tobacco taxes and for tackling the illicit trade in tobacco products, that it is not possible to provide a reliable estimate of tobacco consumption on which duty has not been paid. This is because there is no proven internationally recognised method for determining this figure. Accordingly there is no reliable way of estimating the loss to the Exchequer.

Revenue is aware of a variety of methodologies that are used internationally by the tobacco industry and some Customs and Revenue Administrations for the purposes of estimating the quantity and value of cigarettes smuggled into their jurisdictions. The variety of factors taken into account include: national estimates of the overall number of cigarettes consumed each year; estimates of the quantity of cigarettes brought into the State legally by cross- border shoppers; surveys of empty (discarded) cigarette packs conducted at periodic intervals throughout the country; the volume of cigarettes on which excise duty is charged annually; and the number of cigarettes seized by customs.

It is evident that the only precise information that Revenue can confirm are the last two items listed above i.e. the volume of cigarettes on which duty has been collected and the actual quantity of cigarettes seized. The remaining factors require a significant level of speculation and extrapolation. The Revenue Commissioners have given a tentative estimate that up to 20% of cigarettes consumed may be untaxed but this includes both smuggled cigarettes and cigarettes legally purchased by cross-border shoppers for personal consumption. Based on tobacco duty receipts for 2009 this would equate to approximately €304 million.

A second mobile X-ray container scanner was commissioned by Revenue in January 2010 and is fully operational. Container scanning is one of a number of detection technology applications used to detect contraband. Its deployment has to take account of free movement within the Community, and the objective of not unnecessarily disrupting legitimate trade/container traffic. Revenue also use smaller baggage/ parcel scanners which are deployed at all major ports, airports and postal depots, as well as a tobacco detector dog. The effectiveness and efficiency of resources, including equipment, is kept under review, but at this point it is too early to say whether a further container scanner would justify the capital and operational costs involved.

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