Michelle Mulherin (Mayo, Fine Gael)
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244. To ask the Minister for Finance if he will direct the Revenue Commissioners to take a proactive approach to counteract petrol stretching and diesel laundering, and in particular to put in place a mobile testing laboratory for spot checks at filling stations, in view of the shortcomings in the current reactive system (details supplied); and if he will make a statement on the matter. [23202/15]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners, who are responsible for acting against fuel fraud, that they recognise the serious threats that this criminal activity poses to legitimate businesses, motorists and Exchequer revenues. Action against it is, therefore, a priority for them, and they undertake, on an ongoing basis, an extensive programme of compliance and enforcement activities that are designed to ensure adherence to the legal requirements governing the supply and sale of fuels and to allow action to be taken against fraud. Among the key elements of programme are the carrying out of control and compliance inspections at critical points of the fuel supply chain, and the targeting, in co-operation with other enforcement authorities, of the organised crime groups that are responsible for a large proportion of fraudulent activity.

The Revenue Commissioners have also, since 2011, introduced a range of measures that have enhanced progressively the controls on the fuel supply chain, with the objective of reducing the scope for criminals to source fuels for laundering or to get laundered fuel on to the market.  Key initiatives include the following.

- The introduction in September 2011 of a strengthened licensing regime for auto fuel traders.

- The putting in place in October 2012 of a new licensing regime for marked fuel traders.

- New requirements for the keeping by fuel traders of records of stock movements and fuel deliveries, to ensure that data are available to support supply chain analysis.

- The inception, from January 2013, of a requirement that all licensed fuel traders, make monthly electronic returns of their fuel transactions to Revenue, providing data that can be used to identify suspicious or anomalous transactions or patterns of fuel distribution and support follow-up enforcement action, where necessary.

- The introduction from the start of April 2015 of a new and more effective product for marking rebated fuels that was identified as a result of a joint process conducted with HM Revenue and Customs in the UK. The work of Revenue officers in testing fuel for the presence of the new marker will be supported by mobile equipment that will allow on the spot analysis of samples.

I introduced the necessary legislative provisions to underpin these important initiatives, and have also put in place other measures designed to strengthen Revenue's hand in combatting fuel criminality. The Finance (No. 2) Act 2013 provides that a supplier who is reckless in supplying fuel for a use connected with excise fraud will be liable for duty at the standard rate of tax, and represents a significant disincentive to such activity. In the Finance Act 2014, I introduced measures to further strengthen Revenue's ability to refuse or revoke a mineral oil trader's licence where the trader does nor comply with excise law, does not maintain adequate stock management systems and records, or provides false or misleading information. Revenue's action against fuel fraud has already yielded significant results. In the period since 2011, 31 oil laundries have been detected and closed down, more than 3 million litres of fuel have been seized and 139 filling were closed for trading without a licence or breach of licence conditions. In addition, industry sources report a much-reduced incidence of laundered fuel on the market and increased road diesel consumption. While other economic factors have contributed to this growth, reduced fraud is also an important contributory element. In relation to petrol stretching, I am advised that the Revenue Commissioners have, since last summer, received reports from around the country of problems relating to petrol quality, and suggestions that these problems are attributable to petrol stretching. Petrol stretching involves the illegal addition of a low-tax commodity to petrol, defrauding motorists and the State. Every filling station about which a complaint was made has been visited by Revenue officers and petrol samples taken have been sent to the State Laboratory for scientific analysis. 360 samples were submitted but, despite this extensive programme, evidence of the presence of prohibited stretching agents has been found in only two samples, both from one location. The conclusive results received from those tests led to the seizure of the product. A case is currently before the Courts in one case, and a file is being prepared with a view to prosecution in the other. Following a series of further tests conducted by the State Laboratory, results indicated the presence of road diesel in samples from a variety of locations. This could indicate that petrol was contaminated with road diesel at some point in time. If the problems that have come to light were caused by unintended contamination as a result of diesel being inadvertently mixed with petrol at some point along the supply chain, there would be no Revenue offence involved. However, the Revenue Commissioners are investigating the possibility of tax fraud being associated with the identified problems. In any instance where the analysis of samples by the State Laboratory indicates the presence of illegal stretching agents in petrol, Revenue will take swift and robust action and pursue prosecutions against alleged offenders where possible. I am satisfied that the Revenue Commissioners are undertaking a wide-ranging and effective programme of action against all forms of fuel fraud and am assured that combatting such illegal activity will continue to be a key priority for them.