Brendan Griffin (Kerry South, Fine Gael)
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Question 54: To ask the Minister for Finance if he will consider the introduction of a minimum fine for cigarette smuggling; and if he will make a statement on the matter. [27730/11]

Brendan Griffin (Kerry South, Fine Gael)
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Question 60: To ask the Minister for Finance if his attention has been drawn to the fact that according to Retailers Against Smuggling, the Exchequer lost €460 million from the avoidance of tobacco duty here in 2010; the measures he proposes to tackle this revenue loss; and if he will make a statement on the matter. [27720/11]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 54 and 60 together.

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 tackling of this illicit trade is a key objective.

The strategies employed by Revenue to tackle this illicit trade are multi-faceted. They include 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 also carries out regular multi-agency operations, particularly in relation to large maritime importations and in checks at inland markets.

They have established a high level internal group, chaired at Commissioner level, to examine the risks related to tobacco products tax and to oversee and optimise the 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 adoption of a comprehensive tobacco strategy and action plan.

Revenue continually reviews and updates their strategies and in July 2010, Revenue launched a series of nationwide tobacco 'blitz' type operation, which concentrated additional Revenue resources at ports, airports and at various inland retail points, including markets for the purpose of identifying illicit tobacco products. To date, Revenue has conducted seven tobacco blitz operations that have resulted in the seizure of in excess of 33.2m cigarettes. Further large-scale nationwide operations are scheduled to take place during the last quarter of 2011. In addition to this, there is a programme of Regional level blitz type operations that target markets and other distribution points.

To date in 2011, a total of 92m cigarettes with a retail value of approximately €38.7m and 9,156 kgs of tobacco with a retail value of approximately €3.3m have been seized.

I am aware that various figures have been quoted by the Retailers Against Smuggling and other bodies as representing the loss to the exchequer from the avoidance of tobacco duty. However, the Revenue Commissioners have advised me that a survey commissioned by Revenue and the Office of Tobacco Control in 2009 estimated that 20% of cigarettes consumed in the State had not been taxed in this jurisdiction. The 20% figure was further broken down as 14% illicit product and 6% legally imported by passengers arriving into the State from other jurisdictions. Revenue and the Office of Tobacco Control commissioned a similar survey in the last quarter of 2010 and the results of this latest survey show a consistency with the 2009 figures i.e. 20% of all cigarettes consumed in the State were not taxed in the State with 14% again classified as illegal product and 6% classified as legal non-Irish duty paid product. Based on an estimate of 14%, the loss to the exchequer from illicit cigarette consumption during 2010 would be in the region of €250m (excise duty + VAT).

Regarding the introduction of a minimum fine for cigarette smuggling, I am informed by the Revenue Commissioners that the penalties for cigarette smuggling are contained in section 119, as amended, of the Finance Act 2001. That section sets out the various actions that constitute offences of evasion or attempted evasion of excise duty, as well as the penalties, by way of a fine or imprisonment, or both fine and imprisonment, for such offences.

Where a conviction occurs following a summary prosecution, the fine that may be imposed is €5,000. For convictions following prosecution on indictment, the applicable fine is an amount not exceeding €126,970 or, where the value of the excisable products concerned is greater than €250,000, not exceeding three times the value of the products.

The fine that applies in the case of conviction following summary prosecution was last increased in 2008. The fine for convictions following prosecution on indictment was increased substantially by the Finance Act 2010. That Act also brought the penalty that applies where a case is dealt with under section 13 of the Criminal Procedure Act 1967 into line with that for summary convictions.

The penalty to be imposed in any particular case is, of course, a matter for the Courts. Section 130(2) of the Finance Act, 2001 permits a trial judge, in his or her discretion, to mitigate a fine incurred for an offence under excise law, provided that the amount so mitigated is not greater than 50% of the amount of the fine.

The question of possible increases in the penalties for tobacco smuggling will be considered in the context of the Finance Bill 2012, in consultation with the Revenue Commissioners.