Michael Noonan (Limerick City, Fine Gael)
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I am very mindful of the unfair competitive advantage to be gained by those businesses who operate in the shadow economy thereby creating an un-level playing field for tax compliant businesses and undermining the orderly functioning of the State.

Shadow economy activity is not just confined to illicit activity such as tobacco smuggling, oil laundering and counterfeiting but also ranges from businesses engaging in illegal practices (much of which are facilitated within the cash economy) such as suppressing details of some sales and purchases, keeping certain cash payments 'off the books' and paying employees under an 'off the books' arrangement to individuals doing 'nixers' either in addition to their normal taxed employment or whilst also claiming Department of Social Protection payments.

I am advised by the Revenue Commissioners that tackling shadow economy activity, including combating the illegal trades in tobacco, cigarettes, alcohol and fuel is, and will continue to be, a high priority for them.

Interception of illicit tobacco products, alcohol and fuel is achieved through a combination of risk analysis, profiling and intelligence and the screening of cargo, vehicles, baggage and postal packages, as appropriate. Revenue officers also target the illicit trade at the post-importation level by carrying out intelligence-based operations and random checks at retail outlets, markets and private or commercial premises. Action against the illicit trade in mineral oils includes measures to detect and shut down plants illegally laundering marked mineral oil, to detect illicit products in transit and seize both the products and the vehicles transporting them, and to prevent the sale of illicit products.

There is extensive cooperation with An Garda Síochána in combating these illicit trades, and the relevant agencies in the State also work closely with their counterparts in Northern Ireland, through cross-border groups on tobacco and oils enforcement, to target the organised crime groups that are responsible for large proportions of these illicit markets. In addition, cooperation takes place with other revenue administrations and with the European Anti-Fraud Office, OLAF, in the ongoing programmes at international level to tackle these forms of crime.

Revenue's work against the illegal tobacco trade includes a range of measures designed to identify and target those who are engaged in the supply or sale of illicit products, with a view to seizing the illicit product and prosecuting those responsible. This multi-faceted strategy includes ongoing analysis of the nature and extent of the problem, developing and sharing intelligence on a national, EU and international basis, the use of analytics and detection technologies and ensuring the optimum deployment of resources at points of importation and within the country.

Considerable success is being achieved in Revenue's action against the illicit trades. The total seizures of illicit cigarettes, alcohol products and mineral oils, in each of the last three years are set out in the following table:

YEAR	Cigarettes		Alcohol		Oil
-	Quantity (Million)	Value (€m)	Quantity (Litres)	Value (€m)	Quantity (Litres)
2013	40.8	18.9	55,755	1.5	874,882
2012	95.6	43.3	33,059	0.7	1,113,142
2011	109.1	46	34,040	0.5	1,044,830

The table shows also the estimated value of the seizures of cigarettes and alcohol products. That information is not available in respect of mineral oil products.

Seizures this year include one of some 32.2 million cigarettes, as well as 4.5 tonnes of water pipe tobacco, from a vessel at Drogheda Port. This was the largest seizure to date in Europe this year, and was the result of an intelligence-led operation targeting the activities of an international organised crime group headed up by Irish and UK nationals and based in Europe. Action against the illicit oil trade in the period since 2011 has led to the detection and shutting down of 30 oil laundries and to seizure of some 3 million litres of illicit fuel. In addition, more than 120 filling stations were closed for trading without a licence or for breach of licence conditions.

Legislative action has been taken over recent years to ensure that Revenue has the requisite powers to respond effectively to the problem of the illegal tobacco trade:

- the Finance Act 2012 clarified the legal basis for Revenue officers to open and examine the contents of postal and courier packets that are reasonably believed to contain untaxed excise products;

- the Finance Act 2013 introduced new offence and forfeiture measures relating to the illicit production of tobacco, including offences of involvement with illicit tobacco production, knowingly dealing in or delivering any illicit tobacco product and keeping materials and equipment for the purposes of illicit production;

- provision was made also for the forfeiture of any equipment or materials, including unmanufactured tobacco, used for illicit production;

- the Finance Act 2013 also strengthened the offence provisions relating to the sale or delivery of unstamped tobacco products;

- the Finance (No. 2) Act 2013 provided that a person suspected of an offence of dealing in, or with, unstamped tobacco products must provide information to a Revenue Officer or a Garda and may be required to present any tobacco product concerned for examination, and makes provision for search by a Revenue Officer or Garda of any bag or other receptacle that he or she reasonably believes to contain tobacco products that are concerned in the offence.

As well as those changes to primary law, the State, to give effect to EU Directive 2008/118/EU, introduced a quantitative restriction, with effect from 1 January 2014, on the number of cigarettes that may be brought into the State for personal use by individuals travelling from Bulgaria, Croatia, Hungary, Latvia, Lithuania and Romania. The Excise Duty on Cigarettes (Quantitative Restrictions) Order 2013 (S.I. No. 553 of 2013) provides that the number of tax-paid cigarettes that may be brought into Ireland for personal use by individuals travelling from those Member States, without payment of further excise duty in Ireland, is restricted to 300. Anyone with cigarettes in excess of that quantity must declare them to a Revenue Officer and pay the appropriate excise duty. This restriction will remain in place until 31 December 2017 or until such time as the particular Member State has achieved the required EU minimum tax levels, whichever is the earlier.

In response to illicit fuel trading, Revenue has implemented a comprehensive strategy to tackle the problem through enhanced supply chain controls, the acquisition of a more effective fuel marker and continued robust enforcement action. Supply chain controls have been enhanced progressively since 2011 with the objective of reducing the capacity of criminals to source marked diesel for laundering or to get laundered fuel onto the market. The supply chain controls introduced include new licencing conditions for all fuel traders and the introduction from January 2013 of a requirement that all licensed fuel traders, whether dealing in road fuel or marked fuel, make detailed monthly electronic returns to Revenue of their fuel transactions. Revenue is using this data to identify suspicious transactions and patterns of distribution for investigation. Revenue has also intensified its targeting, in co-operation with other law enforcement agencies on both sides of the border, of enforcement action against suspected fuel laundering operations.

To support further the integrity of the distribution system and minimise the risk of fraud, I introduced a provision in the Finance (No. 2) Act 2013 that will make a supplier who is reckless in supplying rebated fuel for a use connected with excise fraud liable for the duty at the standard rate of tax. This new provision will strengthen Revenue's hand in dealing with those traders supplying rebated fuel recklessly to dubious customers and will provide a further disincentive to such activity.

Revenue has published guidelines for mineral oil traders which will assist them in identifying and avoiding such transactions.

In addition to the measures implemented to date, Revenue and Her Majesty's Revenue and Customs in the UK completed an Invitation to Make Submissions process to identify a new fuel marker and it is expected that a new marker will be introduced in both jurisdictions early in 2015, following consultation with the oil industry and other stakeholders.

Revenue works very closely with fuel sector representative bodies in tackling the problem and they have been very supportive of the measures introduced to combat fuel laundering. The evidence available to Revenue, in terms of feedback from the legitimate trade and increased consumption of road diesel, indicates that this strategy has been very effective.

The Revenue Commissioners will maintain their commitment to acting against all stages of the supply chains for illicit oil and tobacco products and will continue to make every effort to ensure that those involved in them are brought to account before the Courts for their criminal activities.

I understand that the Revenue Commissioners continuously review their methodologies and their legislative requirements and where necessary I will of course, give careful consideration to any proposal that might be put to me in that regard.

Notwithstanding such work, Revenue is of the view that the interests of compliant businesses is best served by them playing their part in combating shadow economy activity by knowing their suppliers, not engaging in shadow economy activity themselves, producing (including anonymously) to Revenue or to other relevant State agencies - either directly or through the Hidden Economy Monitoring Group - information relating to those persons who are involved in shadow economy activity in their geographical area. Such information will enable Revenue (and other relevant State agencies) make best use of their resources in reducing shadow economy activity. In that regard, Revenue has recently launched a dedicated section of its website specifically on the shadow economy and this includes an electronic reporting facility for anyone who has information about shadow economy practices.

The Deputy will be aware that the Hidden Economy Monitoring Group, chaired by the Revenue Commissioners, is a multi-agency group comprising of representatives from business groups, trade unions and State agencies who have a common commitment to tackle the shadow economy. The State agencies include Revenue, the Department of Social Protection and the National Employment Rights Authority (NERA).

Finally, if the Deputy is aware of, or has specific information relating to, shadow economy activity, he should pass that information to my officials who will ensure it is sent to the relevant State agency for examination.