Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 186 to 188, inclusive, and 199 to 201, inclusive, together.

I am advised by the Revenue Commissioners that the quantities of illicit cigarettes and other tobacco products seized in each of the years 2009 to 2013 and in 2014 to the end of October, and the estimated retail value of those products, are set out in the following table.

-	Cigarettes	-	-	Tobacco	-
Year	Quantity (Million)	Value(€ Million)		Quantity (Kgs)	Value(€ Million)
2009	218.5	92		10451	3.7
2010	178.4	75.2		3367	1.2
2011	109.1	46		11158	4
2012	95.6	43.3		5277	1.95
2013	40.8	18.9		4203	1.7
2014 (end Oct)	50.6	24.05		9559	4.09

The Deputy will appreciate that estimating the scale of any illegal activity, and the tax loss to which it gives rise, is necessarily difficult and that estimates of such loss need to be viewed with caution.The extent of the illegal trade in cigarettes is estimated through annual surveys of smokers that are carried out for them and for the National Tobacco Control Office of the Health Service Executive by Ipsos MRBI. The 2013 survey indicated that some 11% of cigarettes consumed were illicit. This represents a loss of some €212 million to the exchequer in excise duty and VAT, assuming that the illegal cigarettes consumed displaced the equivalent full tax paid quantities of cigarettes. A further survey in respect of 2014 is underway and it is expected that the results will be available towards the end of the first quarter of 2015.

A separate and smaller-scale survey on "roll your own" tobacco conducted by Ipsos MRBI last year found that 15% of tobacco packets held by the smokers surveyed were illegal. On that basis, it is estimated that the loss to the exchequer would be in the order of some €17 million.

The penalties for smuggling tobacco products are laid down in section 119 of the Finance Act 2001.Section 78 of the Finance Act 2005 provides for penalties for the illegal sale of unstamped tobacco products while section 78A of that Act contains penalties in relation to the illicit production of tobacco products.On conviction following summary prosecution for any of these offences, a court may impose a fine of €5,000 or a term of imprisonment not exceeding 12 months, or both a fine and imprisonment. A fine of up to €126,970 or a term of imprisonment not exceeding 5 years, or both a fine and imprisonment, may be imposed on conviction following a prosecution on indictment. Section 119 of the Finance Act 2001 provides also that, where the value of the goods concerned (inclusive of any tax or duty payable on them) is greater than €250,000, a fine of an amount not exceeding three times their value may be imposed.

The specific penalty to be imposed in any particular case is a matter for the courts.Section 130(2) of the Finance Act 2001 permits a trial judge, in his or her discretion, to mitigate a fine or penalty incurred for an offence under excise law, provided that the amount mitigated is not greater than 50 per cent of the amount of the fine or penalty.

The penalties for summary and indictable offences in relation to tobacco smuggling and illegal selling were increased significantly in 2008 and 2010 respectively.Fines for summary offences are set at the maximum level that may be applied by the District Court.There are no proposals for further penalty increases at present, but the position is kept under review.

I wish to inform the Deputy also that a number of legal provisions have been introduced in recent years to further strengthen Revenue's response to 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 offences and forfeiture measures relating to the illicit production of tobacco, including offences for 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. That Act 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 a member of An Garda Síochána 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, I 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.

I am satisfied that the legislative framework as it now stands, and the penalties that apply in respect of tobacco related offences, provide an effective basis for action  by Revenue against the illegal tobacco trade. Nonetheless, the position will be kept under review and I am committed to responding positively to any proposals for additional measures that might assist the Revenue Commissioners in that regard.

Revenue relies on the tobacco tax stamp to identify tax-paid tobacco products and this will continue following the introduction of standardised packaging. The standardised packaging legislation will accommodate the tax stamp and Revenue expects that the new packaging rules will ensure effective security features to make counterfeiting very difficult.  The tobacco tax stamp has, itself, a range of sophisticated security features to minimise the risk of counterfeiting.  I am advised that Revenue's view is that the introduction of standardised packaging will not affect their work against the illicit trade in tobacco products. 

Revenue currently has three mobile scanner systems. Two of these are mobile x-ray container scanning systems that are based at Dublin Port and Rosslare Ferry Port respectively. Both of these scanners are available for deployment at other ports, and at other locations such as warehouses, as required, and Revenue uses them, on a risk assessment basis, at various locations throughout the country. The other mobile scanning system is a scanner van, a specialist vehicle incorporating an x-ray facility and radiation detection facilities. It is used for monitoring baggage and cargo at airports for narcotics, tobacco products, radioactive materials and other contraband. It also allows Revenue officers to carry out control actions at other locations such as warehouses and courier depots.

The mobile scanner systems are complemented by static baggage and parcel scanners at all major ports, airports and postal depots.

Revenue continuously reviews its detection technology requirements, taking account of developments in those technologies, and has availed of part-funding under the European Union's Hercule programme to acquire new or replacement equipment of this kind. I understand that Revenue is generally satisfied with the current scanning capabilities and consider that the container ports are adequately serviced by the two mobile x-ray container scanning systems. I am advised also that the performance of the scanner van has been evaluated on an ongoing basis since its acquisition, and that the possibility of augmenting this resource with additional units is currently being considered.