Dara Calleary (Mayo, Fianna Fail)
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To ask the Minister for Finance the measures he is taking to tackle fuel smuggling in the border area; his views on whether the extension of the carbon levy to solid fuels may result in an additional form of smuggling; and if he will make a statement on the matter. [14055/13]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that the main form of criminality in the fuel sector is the laundering of marked gas oil and the sale of the laundered product as auto-fuel. Revenue is aware of the threat that this criminal activity poses to law-abiding businesses, and to the Exchequer in terms of lost revenue from mineral oil tax. The laundering process also threatens the environment, through the waste sludge that it generates, and laundered fuel can damage the engines of vehicles in which it is used. Combating this illegal activity is, therefore, a high priority for Revenue and enforcement action is taken at all stages of the fuel supply chain, against both those involved in the laundering process and those who sell laundered fuel. Considerable success is being achieved in this work. During 2012 11 oil laundries were detected and laundering equipment, materials and vehicles were seized, along with 199,000 litres of oil. A further 914,000 litres of illicit fuel were also seized, the greater part from retail outlets or in the course of delivery to such outlets. In addition, 57 retail outlets were shut down in the course of 2012 for trading without a licence for the sale of fuel or for breach of licence conditions, following the closure of 32 outlets during 2011.

Because of the links that organised criminality has with the illegal fuel trade, Revenue works closely with An Garda Síochána in combating it. A Cross-Border Fuel Fraud Enforcement Group, involving all relevant agencies from the State and from Northern Ireland, also facilitates and enhances cooperation in dealing with this form of criminality. Arising from its work, a number of groups involved in the laundering and distribution of illegal fuels, which operate in both jurisdictions, have been specifically targeted for investigation.

In addition to the ongoing enforcement action against the illegal fuel trade, steps are being taken to ensure enhanced supervision throughout the fuel supply chain, to deny fuel launderers access to marked fuel for laundering and to deny them access to market for their illegal product. Following on from a more robust approach to licensing requirements for the sale of auto-fuel adopted since 2011, a new licensing requirement for marked fuel traders came into operation from 1 October 2012. As well as these important licensing changes, there is a new requirement, effective as and from the start of this year, for all fuel traders to make monthly electronic returns on their fuel transactions to Revenue. This will facilitate Revenue in detecting unusual or anomalous patterns of activity in oil trading, and in taking action against fraudulent activity.

Revenue is also working in close cooperation with Her Majesty’s Revenue and Customs on obtaining an improved and more effective fuel marker. There was a very good response to a joint invitation to make submissions on the provision of a new marker, and the submissions received are being evaluated at present.

The extensive enforcement action that is being taken against illegal activity in the fuel market highlights the commitment to combating it. The new legislative steps that have been taken, together with the work on development of a more effective fuel marker, will serve to enhance the effectiveness of this action, and there will be no letting up in the work against those involved in this form of criminality.

On the matter of solid fuel carbon tax, the Revenue Commissioners will collect this tax on a self-assessed basis and will apply the full range of compliance interventions and enforcement provisions for self-assessed taxes.

Any person who makes a first supply of solid fuel in the State must register with the Revenue Commissioners and will be accountable and liable for payment of the tax. In circumstances where there are grounds to believe that a taxable supply of solid fuel has not been tax paid, including a supply by persons operating in the shadow economy, Revenue will investigate the person’s tax liabilities in accordance with the particular circumstances of each case. If confirmed, Revenue will enforce the collection of any unpaid tax and if offences have been committed under any part of the tax code, will take action to prosecute those offences.

Solid fuel carbon tax will become operational in a market that is already subject to strict regulation. Regulations to enable local authorities to control the type of coal supplied in the State have been put in place as part of the robust mechanism introduced by the Minister for the Environment to address the risk of coal products with lower environmental standards being sourced from outside the State, in particular Northern Ireland.

Suppliers who are producing and supplying solid fuel unlawfully are subject to investigation and prosecution by local authorities and other State Agencies charged with enforcing environmental regulations and preventing such supply. Revenue will liaise with these bodies, as required, to ensure that lawful supplies of solid fuels are properly taxed.