Brendan Griffin (Kerry South, Fine Gael)
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63. To ask the Minister for Finance his views on ways of putting diesel launderers out of business; if he will review the current green diesel system, which provides enormous business potential for launderers; and if he will make a statement on the matter. [1979/15]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Revenue Commissioners that they are aware of the threat posed by diesel laundering and have implemented a comprehensive strategy to tackle the problem.  This strategy includes the following elements:

- The licensing regime for auto fuel traders was strengthened with effect from September 2011 to limit the ability of criminals to get laundered fuel onto the market;

- A new licensing regime was introduced for marked fuel traders in October 2012, which is designed to limit the ability of criminals to source marked fuel for laundering;

- New requirements in relation to fuel traders' records of stock movements and fuel deliveries were introduced to ensure data are available to assist in supply chain analysis;

- Following a significant investment in the required IT systems, a new supply chain reporting regime was introduced from January 2013, which requires all fuel traders to make monthly electronic returns to Revenue of their fuel transactions. Revenue is using this data to identify suspicious or anomalous transactions and patterns of distribution for investigation;

- Following a joint process with Her Majesty's Revenue and Customs in the United Kingdom, a new, more effective fuel marker was identified and will be implemented in the two jurisdictions from the end of March next; and

- Intensified targeting, in co-operation with other law enforcement agencies on both sides of the border, of enforcement action against suspected fuel laundering operations. 

In addition, I introduced a 'reckless trading' provision In Finance (No. 2) Act 2013 that makes a supplier who is reckless in supplying rebated fuel for a use connected with excise fraud liable for the duty evaded. This provision has strengthened Revenue's hand in dealing with those traders supplying fuel recklessly to dubious customers.  In Finance Act 2014, I introduced provisions to strengthen further Revenue's ability to refuse or revoke a mineral oil trader's licence where the trader does not comply with excise law, does not maintain adequate stock management systems and records, or provides false or misleading information. Revenue's strategy has already yielded significant results. Since mid-2011, 137 filling stations were closed for breaches of licensing conditions, over three million litres of fuel have been seized and 31 oil laundries were detected and closed down.  Industry sources indicate a much-reduced incidence of laundered fuel on the market and road diesel consumption and tax revenues are up 13% compared with a couple of years ago. Obviously, other economic factors have contributed to this growth but reduced fraud is an important factor.  It has been suggested on a number of occasions that the current system of marking lower taxed fuels should be replaced by one based on repayments to the users.  However, a change of this nature would impact on a wide range of users, would be costly to implement and would, itself, be at risk from fraud.  Marked gas oil has a wide variety of uses, including the propulsion of trains, in agricultural, construction and industrial machinery, for commercial sea-navigation (including fishing) and commercial and home heating purposes.  A change to a rebate system would involve the establishment of an expensive and wide-ranging repayments system and would place a new administrative burden on oil traders, on the large number of users and the Revenue Commissioners. It would also impose significant cash-flow costs on those currently using marked gas oil. Repayment schemes are vulnerable to abuse and the introduction of a wide-ranging repayment scheme would not offer greater security against fraud than the current arrangements.  Fuel in respect of which a repayment of duty was made could be easily diverted to on-road use.  

For these reasons, and in light of the progress made by Revenue in tackling the problem, I am satisfied that the strategy being implemented by Revenue is the best course of action. I am also confident that the introduction of the new marker here and in the United Kingdom from the end of March will reinforce the measures already implemented.