Alan Farrell (Dublin North, Fine Gael)
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Question 87: To ask the Minister for Finance if he will provide, in tabular form, the annual estimated loss to the Exchequer due to the illegal selling of tobacco products in 2010 and 2011; his Department's proposals to minimise losses in 2012 and 2013; and if he will make a statement on the matter. [26838/12]

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 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 2010 estimated that 20% of cigarettes consumed in the State had not been taxed in this jurisdiction. This figure was further broken down as 14% illicit product and 6% legally imported by passengers arriving into the State from other jurisdictions. A further survey was conducted in 2011, the final results of which are due to be released within the coming weeks.

The following is the annual estimated loss in respect of excise duty and VAT, based on a 14% loss to the exchequer from illicit cigarette consumption.

The illegal smuggling of cigarettes and other tobacco products and the illicit selling of these products is a problem for many tax jurisdictions throughout the world. Ireland has a longstanding policy, primarily because of health concerns and also for budgetary reasons, of high tobacco taxation, and this makes this State a particularly attractive market for tobacco smugglers. Easy access to Ireland via cheap flights from countries with significantly lower tobacco taxes accentuates the attractiveness of Ireland for criminals involved in the illegal importation and sale of tobacco. The Revenue Commissioners are responsible for the collection of tobacco products tax, and for tackling the illicit trade in cigarettes and tobacco products. They attach a high priority to this area, and they continuously review their response to the problem and their effectiveness in tackling the illicit tobacco trade.

The operational strategy employed by Revenue to tackle the illicit tobacco 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, and 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 in order to disrupt the internal distribution network for illicit tobacco.

In 2010, Revenue established a high-level internal group, chaired at Commissioner level, to examine the risks related to tobacco products tax evasion 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 the adoption of a comprehensive tobacco strategy, which is underpinned by annual action plans. This 3-year (2011-2013) strategy, which is published on Revenue's website www.revenue.ie, includes a series of programmes which are designed to complement each other in targeting the supply and demand sides of the market for contraband tobacco in Ireland.

Revenue's strategic-level plans include ensuring that the legitimate trade remains compliant; delivering more effective and visible interventions through enhanced capability and better deployment of resources; further development of cooperation and intelligence sharing at organisational, national and international level; a commitment to prosecute all serious cases of tobacco tax evasion and a focus, in partnership with other Government agencies, on reducing the demand for contraband tobacco.