James Reilly (Dublin North, Fine Gael)
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Question 221: To ask the Minister for Finance the estimated amount of revenue lost in 2007, 2008, 2009 and to date in 2010 due to tobacco smuggling; and if he will make a statement on the matter. [39310/10]

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 there is no internationally recognised method for precisely determining the amount of tax lost as a result of the illicit trade in cigarettes. On the basis of a 2009 survey carried out independently on behalf of Revenue and the Office of Tobacco Control, Revenue estimates that approximately 20% of cigarettes consumed in the State had not been taxed in this jurisdiction. It is important to emphasise that this estimate includes 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.

Figures for 2007 and 2008 are unlikely to have been significantly different. Figures for 2010 to date are not available at this time but a new survey is scheduled for later this year and the results are expected to be available in 2011.

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 and international basis, ongoing review of operational policies, development of analytics and deployment of detection technologies, optimum deployment of resources at point of importation and internally to intercept the contraband product and to prosecute those involved.

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. Revenue enforcement officers also target this illicit trade at the post-importation level by carrying out intelligence-based operations and random checks at retail outlets, markets and private and commercial premises. Revenue and An Garda Síochána also carry out regular multi-agency operations, particularly in relation to large maritime importations and in checks at inland markets.

In terms of detection equipment resources, a second mobile X-ray container scanner, to augment the one first deployed in 2006, was commissioned by Revenue in January 2010 and is now fully operational. Container scanning is one of a number of detection technology applications used to detect contraband. However, its deployment must take into account the principle of free movement of goods within the Community as well as the objective of minimal disruption to legitimate trade.

Revenue also uses a tobacco detection dog in addition to the smaller baggage/parcel scanners, which are deployed at all major ports, airports and postal depots. Two new X-ray scanners were also purchased within the last 12 months for use in postal depots.

Revenue's approach in relation to the detection of tobacco-related offences is 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 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. Further such intensive operations are planned, to supplement the normal ongoing level of detection and enforcement activities.

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, co-ordinating national blitz-style operations, evaluation and acquisition of scanning and other detection technologies and learning from best practice internationally.

The multi-faceted approach that Revenue has adopted has resulted in the seizure of 161m cigarettes and more than 2,700 kgs of tobacco to date in 2010.