Michael Healy-Rae (Kerry South, Independent)
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Question 96: To ask the Minister for Finance if he will review a matter (details supplied) regarding cigarette smuggling; and if he will make a statement on the matter. [34299/11]

Michael Noonan (Limerick City, Fine Gael)
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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 they regard the tackling of the illicit tobacco trade as a high priority area. The strategy employed by Revenue to tackle 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 detection technologies, optimum deployment of resources at point of importation and inland, in order 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.

Regarding the introduction of a minimum fine for cigarette smuggling and illegal tobacco selling, I am informed by the Revenue Commissioners that the penalties for these offences are contained in section 119 of the Finance Act 2001. That section sets out the various actions that constitute evasion or attempted evasion of excise duty, as well as the penalties, by way of fine and/or imprisonment for such offences. Under that provision the penalty on summary conviction for evasion of excise duty is €5,000 and/or a term of imprisonment not exceeding 12 months. The penalty on indictment is up to €126,970 or, where the value of the excisable product concerned is greater than €250,000, up to three times the value of the products, and/or a term of imprisonment not exceeding 5 years. The monetary penalty of €126,970, which was sanctioned by the Oireachtas in the 2010 Finance Act, represents a significant increase on the previous penalty of €12,695.

In 2010, ninety-seven court convictions for cigarette smuggling were secured with total fines of €50,380 and fifteen custodial sentences were imposed. In addition, a further forty-one convictions were obtained for illegal selling of unstamped tobacco products with total fines of €107,750, together with seven custodial sentences and two community service orders imposed. To date in 2011, eighty-five court convictions for cigarette smuggling have been secured with total fines of €113,350 and twenty-six custodial sentences have been imposed with nineteen suspended. A further forty-one convictions for illegal selling of unstamped tobacco products have been obtained with total fines of €85,850 and eleven custodial sentences have been imposed with six suspended.

The Deputy will appreciate that 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 or penalty incurred for an offence under excise law, provided that the amount so mitigated is not greater than 50% of the amount of such fine or penalty.

The Europol report referred to in the letter accompanying the Deputy's Question is the Europol EU Organised Crime Threat Assessment (OCTA 2011). That report stated that preferred destinations for cigarette smuggling within the EU are countries with comparatively high taxes on tobacco such as the Scandinavian countries, Germany, Spain, the UK and Ireland. However, the level of cigarette smuggling in a given country is influenced by a variety of factors, of which price is only one. These factors also include geographical location, population demographics, the level of cross border trade, price differential with neighbouring countries and general accessibility by air, sea, road and rail.