Michael Noonan (Limerick East, Fine Gael)
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Question 36: To ask the Minister for Finance the steps being taken by the Revenue Commissioners and the Customs Service to eliminate the illegal trade in cigarette and other tobacco products; and if he will make a statement on the matter. [33929/10]

Brian 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 products tax, and for tackling the illicit trade in cigarettes and tobacco products that the information requested by the Deputy is as follows.

Firstly, the Revenue Commissioners acknowledge that there is no internationally recognised method for precisely determining the amount of tax lost as a result of the illicit trade in cigarettes. However, Revenue estimates that approximately 20% of cigarettes consumed in Ireland in 2009 had not been taxed in Ireland. It is important to emphasise that this estimate would include both illicit cigarettes and legal cross-border purchases brought into the State for personal consumption.

Revenue would further tentatively estimate that this figure of 20% comprises 14% illicit product and 6% legal cross-border purchases. Based on an estimate of 14%, the loss of Excise duty to the exchequer from illicit cigarette consumption during 2009 would be in the region of €200m.

The strategy of the Revenue Commissioners for tackling this illicit trade is multi-faceted. It includes ongoing analysis of the nature and extent of the problem, developing and sharing intelligence on a national, EU wide and international basis, ongoing review of operational policies, development of analytics and deployment of detection technologies, optimum deployment of resources at points of importation and internally to intercept and seize the contraband product and to prosecute those involved.

Revenue officials are located at all key ports and airports and they are focused on the interception and seizure of illicit products at the point of importation. Revenue enforcement officers also target this illicit trade at the retail level by carrying out intelligence-based operations and random checks at retail outlets, markets and private and commercial premises.

Interception at the point of importation is achieved through a combination of risk analysis, profiling, intelligence, and the screening of cargo, vehicles, baggage and postal packages.

The Revenue Commissioners have also established a high level internal group, chaired at Commissioner level to examine the risks related to tobacco excise, and to monitor and optimise performance in relation to detection of counterfeit and contraband tobacco products. This group has promoted a number of initiatives aimed at counteracting the illicit trade in tobacco. These include improved profiling of passengers and freight to identify tobacco smugglers, the recent establishment of a tobacco hotline, coordinating national blitz-style operations, evaluation and acquisition of scanning and other detection technologies and learning from best practice internationally.

In recent years, Revenue has signed Memoranda of Understanding with two of the main cigarette manufacturers, ITL and JTI, to further cooperation in relation to the illicit tobacco trade. In addition, Revenue meets regularly with the trade association representing the leading tobacco companies as well as the four major global manufacturers.

The problem of tobacco smuggling is a global one and requires a very high level of international and inter-agency co-operation. In this regard Revenue's Customs Service works very closely with their colleagues in An Garda Síochána on a multi-agency basis and with enforcement agencies throughout the EU and with OLAF, the EU Anti-Fraud agency. This high level of co-operation has resulted in many successful detections of illicit products and in the prosecution of those responsible.

Earlier this month the Revenue Commissioners together with the European Anti-Fraud Agency (OLAF) co-hosted a conference in Dublin on the illicit tobacco trade. The conference, which was the first of its kind, brought investigators and prosecutors from all 27 member states together with their counterparts from law enforcement agencies from across the U.S.A. The conference recognised that the problem of illicit tobacco was a global concern.

Revenue's strategies in relation to the detection of tobacco-related offences are under continuous review. For example, in July of this year Revenue launched a nationwide tobacco operation, which concentrated additional Revenue resources at ports, airports and at various retail points for the sole purpose of identifying illicit tobacco products. This resulted in 561 seizures totalling 13.7m cigarettes and 195 kgs tobacco in the course of the two week period of the operation.

This multi-faceted approach that Revenue has adopted has resulted in the seizure of 148m cigarettes and more than 2,400 kgs of tobacco to date this year.

Follow-up investigations are also conducted with a view to identifying those responsible and instituting criminal proceedings where the necessary evidence has been obtained. In 2009 the Revenue Commissioners prosecuted 165 cases for various tobacco offences.

My Department, in consultation with the Revenue Commissioners, regularly review the legislative framework. For example, the penalties for tobacco offences were significantly increased in the Finance Act 2010 when the penalty for conviction on indictment increased from €12,695 to €126,950 or up to three times the duty paid value of the goods, whichever is the greater, and/or a term of imprisonment not exceeding five years.