Michael McGrath (Cork South Central, Fianna Fail)
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Question 76: To ask the Minister for Finance his estimate of the amount of revenue lost to the Exchequer annually through tobacco smuggling; the number of persons who were brought to court, convicted, imprisoned and fined for tobacco smuggling in 2010 and to date in 2011; the average fine for tobacco smuggling in each year; the extent to which the increased fines allowable for tobacco smuggling, as set out in the Finance Act 2010, have been utilised; his plans to introduce new measures, legislative or otherwise, to combat tobacco smuggling; and if he will make a statement on the matter. [40233/11]

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, 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, 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). A further survey is currently underway.

In 2010, Revenue enforcement officers seized 178.3 million cigarettes and 3,342 kg of tobacco. There were ninety-seven convictions for cigarette smuggling secured in the courts with fifteen custodial sentences imposed of which ten were suspended. Total fines for cigarette smuggling amounted to €50,380, with an average fine of €593. A further forty-one convictions were secured for illegal selling of unstamped tobacco products with seven custodial sentences, of which four were suspended, and in addition two community service orders were imposed. Total fines for illegal selling amounted to €107,750, with an average fine of €2,912.

To date in 2011, a total of 98.05m cigarettes and 11,314kgs of tobacco have been seized. There have been ninety-three convictions for cigarette smuggling with thirty custodial sentences, of which nineteen were suspended and a further five community service orders, one of which is under appeal. Total fines for cigarette smuggling amounted to €128,550, with an average fine of €1,761. A further fifty-one convictions were secured for illegal selling of unstamped tobacco products, with twelve custodial sentences, of which seven were suspended. Total fines for illegal selling amounted to €107,850 with an average fine of €2,656.

With regard to the criminal sanctions available for prosecution of tobacco smuggling offences, the penalty on summary conviction for evasion of duty is €5,000 and/or a term of imprisonment not exceeding 12 months. The penalty on indictment is up to €126,970 and/or a term on imprisonment not exceeding 5 years, or, where the value of the product concerned is greater than €250,000, up to three times the value of the products. The monetary penalty of €126,970, which was sanctioned by the Oireachtas in the 2010 Finance Act, represents a significant increase on the previous monetary penalty of €12,695. Revenue reviews the relevant legislation on an annual basis in the context of Finance Act requirements and submits proposals to my Department as necessary.

As regards the penalty provisions of the 2010 Finance Act, I am advised that on account of the timeline involved in bringing cases to court stage on indictment, it is too early as yet to assess the impact of these penalties. The Deputy will also appreciate that the precise penalty imposed on conviction in any individual case is solely a matter for the Courts and I do not propose to make any comment in that regard.

The Commissioners inform me that they regard the tackling of the illicit tobacco trade as a high priority area. 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 contraband and counterfeit 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 detect tobacco smuggling, the establishment of a tobacco hotline, co-ordinating national blitz-style operations, evaluation and acquisition of scanning and other detection technologies and learning from best international practice.