Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context

Question 126: To ask the Minister for Finance the approximate number of litres of agricultural diesel which qualified for tax relief sold in the State in each of the past three years; the approximate number of litres of fully duty paid auto diesel and petrol sold in the State in the same period; and if he will make a statement on the matter. [1510/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

I am informed by the Revenue Commissioners that it is not possible to identify agricultural diesel separately but the figures for Marked Gas Oil (MGO), which is mainly used for agriculture, industrial and heating purposes are given below. It should be noted that 2011 figures are provisional and subject to change.

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context

Question 127: To ask the Minister for Finance if he is concerned by reports that the laundering of agricultural diesel is resulting in a substantial loss of revenue to the Exchequer; if he has given consideration to introducing a rebate scheme to replace the current system; if he intends to bring forward alternative proposal; and if he will make a statement on the matter. [1511/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

I am informed by the Revenue Commissioners, who are responsible for the collection of mineral oil tax and for tackling the illicit trade in mineral oil products, that they are acutely aware of the various illegal activities that lead to loss to the Exchequer of mineral oil tax. The most serious risk in this regard is the large scale laundering of markers from mineral oil which is subject to a reduced rate of mineral oil tax on condition that it is not used in road vehicles. The Deputy will appreciate that, due to its nature, it is impossible to provide a reliably accurate estimate of the extent of any illegal activity. 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; and prosecution of those involved in illegal activities in relation to mineral oils.

In 2010, Revenue enforcement staff detected four oil-laundering plants in this jurisdiction and seized 228,000 litres of laundered oil. In addition, nine retailers were found dealing in laundered oil and eight haulage companies were detected using it in their vehicles. There were four court convictions in 2010 for laundered oil offences.

In 2011 nine oil laundries and 327,000 litres of laundered fuel were seized, together with nine oil tankers and twenty-nine other vehicles. 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 the cases. In addition, a further 718,181 litres of illicit mineral oil has been seized, the large majority from retail outlets or in the course of delivery to such outlets

Revenue is currently reviewing its enforcement options, to ensure that its action against this illegal activity continues to be as effective as possible. 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. Consideration is being given also, in the context of the forthcoming Finance Bill, to possible changes in the law, particularly from the point of view of the control of the supply of oil, which would enhance the capacity to combat this illegality.

It is assumed that the Deputy's question envisages a movement away from the current system of marking of oil to which a reduced rate of tax applies to one in which certain users would be given refunds of part of the mineral oil tax paid by them in respect of fuel used for non-auto purposes. This would, however, involve the establishment of an extensive repayments system, which would give rise to a significant administrative burden and costs for oil traders, users and Revenue, as well as posing significant cash-flow costs for those who currently use marked oil. Moreover, repayment systems are vulnerable to abuse and would be likely to be targeted by criminal elements such as those currently involved in oil laundering. It has to be borne in mind also that, even if there were a move to a repayments system, those involved would still have the possibility of sourcing UK marked oil for laundering. A move away from marking could only be considered, therefore, if the UK were to do likewise.

For those reasons, it is not clear that a repayment system would be less susceptible to fraud. The intention, therefore, is to ensure that controls relating to the sale and distribution of oils, and enforcement action for combating laundering, are as effective as possible.