Joe O'Reilly (Cavan-Monaghan, Fine Gael)
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Question 147: To ask the Minister for Finance the number of detections of fuel laundering in 2011; the number of laundering factories that have been prosecuted and closed; the number of retail outlets that have been prosecuted for using laundered or washed diesel; the staffing levels that exist in the agencies charged with dealing with diesel laundering; and if he will make a statement on the matter. [34621/11]

Michael Creed (Cork North West, Fine Gael)
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Question 153: To ask the Minister for Finance the estimated cost to the Exchequer of fuel laundering; in view of its prevalence and the failure of the State to effectively combat this activity, the consideration being given to alternative policy approaches on this issue; and if he will make a statement on the matter. [34705/11]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 147 and 153 together.

I am informed by the Revenue Commissioners, who are responsible for the collection of mineral oil tax and for tackling the illicit trade in fuel products, that they are aware of the threat to the Exchequer posed by laundered fuel. The predominant illicit activity in the mineral oil area in both Northern Ireland and the Republic is the laundering of marked diesel and its sale through illegal outlets. In both jurisdictions the respective difference in excise rates between marked (rebated) and normal diesel offers a considerable incentive for oil laundering and this illicit activity poses a serious threat to the Exchequer and the economy on both sides of the border. The Deputies will appreciate that it is not possible to accurately estimate the loss to the national exchequer from individual activities within the shadow economy such as fuel laundering.

Revenue employs a broad range of compliance and enforcement strategies to detect and counteract illegal practices involving mineral oils. These include ongoing analysis of the nature and extent of the problem; development and sharing of intelligence with agencies on both sides of the border; the conduct of intelligence driven operations using covert surveillance to identify oil laundry locations; seizure of illicit product, laundering equipment and vehicles; physical sampling at road checkpoints; closure of unlicensed or improperly licensed outlets and seizure of stock and prosecution of those involved in illegal activities in relation to mineral oils.

So far this year, nine oil laundries have been detected, together with 327,000 litres of laundered fuel, and nine oil tankers and twenty-nine other vehicles have been seized. Sixteen persons were arrested in the course of these operations and files have been sent to the Director of Public Prosecutions, who has to date issued directions to prosecute on indictment in respect of two of these cases. The Deputies will appreciate that there is some time-span between the detection of an offence and the appearance of a defendant before the courts. So far in 2011, in addition to the 327,000 litres of fuel seized in the course of raids on oil laundries, a further 516,270 litres of illicit mineral oil has been seized, the large majority from retail outlets or in the course of delivery to such outlets. Revenue has obtained two convictions in the courts this year against the proprietors of filling stations that were found to be selling laundered mineral oil as auto diesel. Revenue is currently engaged in a vigorous campaign targeting specific locations nationwide, with the intention of immediate closure of unlicensed outlets and the challenging of other instances of non-compliance. As part of this drive, warning letters have been issued to unlicensed retail outlets and a number of these have been effectively closed down by the actions of Revenue enforcement teams. This campaign is ongoing and Revenue is in the process of seizing illicit product and closing down a further number of unlicensed or otherwise illegal retail outlets. This month alone, in a recent targeted enforcement operation by Revenue officers, ten filling stations, one fuel depot and two private dwellings in counties Dublin, Galway and Louth were raided. A total of 158,000 litres of fuel were seized from three of these premises, including two tankers of fuel, and approximately €39,000 was detained under the Proceeds of Crime legislation.

Revenue continuously keeps under review the effectiveness of legislation and regulations in relation to combating the illicit trade in mineral oil. This includes reviewing powers, penalties, etc, and making recommendations to my Department where legislative amendments are required. The ongoing review of effectiveness includes consideration of alternative approaches, as referred to by the Deputy, to tackling the illicit removal of fuel marker. General consideration has been given, in this context, to a rebate system. However, Revenue advises me that such a system would pose different problems. It would involve the establishment of a very extensive repayment system, giving rise to a very significant administrative burden for oil traders, consumers and for Revenue and would pose significant cash-flow difficulties for those who currently use marked gas oil. Repayment regimes are vulnerable to abuse and liable to be exploited by criminal elements, such as those currently involved in fuel laundering.

Revenue is currently reviewing its enforcement options in the context of reductions in the sulphur content of some fuels that have been introduced under recent EU environment legislation. The matters being addressed include the potential development of an enhanced fuel marker. In this regard, close liaison has been established with HM Revenue & Customs. Revenue is also considering strengthening the Regulations governing the keeping for sale of fuel products and a renewed focus on links in the laundered fuel supply chain.

The Irish Petrol Retailers Association, which represents the majority of legitimate retail outlets in the State, is working closely with the Revenue Commissioners to counteract the threat posed by the sale and distribution of illicit mineral oil.

Revenue is an integrated tax and customs administration and staff are not allocated by function. The Deputies will be aware that Revenue's overall staff numbers have been reduced over the past two years in the context of Government policy on civil service numbers and now stand at approximately 5,940. However, the Revenue Commissioners assure me that their staff resources deployed in anti-evasion enforcement have been maintained and are indeed augmented when specific operations are organised.