Thursday, 5 March 2020
Department of Finance
83. To ask the Minister for Finance the estimated cost to the Exchequer on an annual basis of illegal trade in tobacco, drink and fuel products; the additional measures planned to counteract such illicit trade; and if he will make a statement on the matter. [2927/20]
84. To ask the Minister for Finance the additional measures he plans to implement to counteract illegal cross-Border trade in tobacco, drink and fuel products; and if he will make a statement on the matter. [2928/20]
I propose to take Questions Nos. 83 and 84 together.
I am assured by Revenue that combating the threat which fuel fraud and the illicit alcohol and tobacco trades pose to legitimate business, consumers and the Exchequer continues to be a priority.
Steps taken by Revenue to combat the illegal fuel trade include the introduction of stringent supply chain controls and reporting requirements, and a rigorous programme of risk focused enforcement action. In addition, Revenue and the UK Revenue and Customs undertook a joint initiative to introduce a new marker for use in marked fuels, which came into operation in April 2015. The industry view is that the actions taken have been successful in curtailing fuel fraud.
Illicit trade in alcohol can occur through the diversion of untaxed alcohol onto the market, through the production of counterfeit alcohol and through smuggling from countries with lower taxes. Revenue takes appropriate action where illicit activity is detected and this action is informed by intelligence on criminal activity and risk-based examination of commercial traffic and stock in retail premises.
Revenue acts against all aspects of the illegal tobacco trade and uses a combination of risk analysis, profiling and intelligence, and risk-based screening of cargo, vehicles, baggage and postal packages to intercept illicit products. Action after importation includes checks at retail outlets, markets and private and commercial premises.
Revenue and An Garda Síochána collaborate closely in acting against fuel, alcohol and tobacco crime, and also cooperate closely with their counterparts in Northern Ireland, in the framework of the North-South Joint Agency Task Force. This cooperation plays a key role in targeting the organised crime groups responsible for much of this criminality, who operate across jurisdictions.
I am advised by Revenue that it is inherently difficult to estimate the extent of any illegal trade with confidence and it is not possible, therefore, to estimate the potential loss to the Exchequer of illegal trade in alcohol. The extent of the illicit trade in cigarettes is estimated, however, through annual surveys of smokers that are carried out for Revenue and the National Tobacco Control Office of the Health Service Executive by IPSOS MRBI. The 2018 survey found that 13% of cigarettes consumed in the State were illicit. This compares to a survey estimate of 13% for 2017 and 10% for 2016. Assuming that the illicit cigarettes consumed displaced the equivalent full tax paid quantity of cigarettes, the results of the 2018 survey indicate that the loss to the Exchequer in excise duty and VAT was approximately €211m.
Revenue conducted random National Sampling Programmes in the years 2016 to 2019 to assess the extent of fuel laundering. The programmes each involved nearly one in ten of some 2,500 holders of auto fuel trader licences. Tests of diesel samples taken from the randomly selected traders found no evidence of the new marker in any of them. The results of this sampling are a clear indication that Revenue’s actions have resulted in the near elimination of the selling of laundered products at retail level. The 2018 sampling programme was expanded to include hauliers and other businesses in the transport sector. A very small number of samples from this programme tested positive. The results of the 2019 sampling programme were broadly in line with previous years.
I am satisfied that Revenue’s work against fuel fraud and the illicit alcohol and tobacco trades has achieved a considerable level of success. I know that Revenue is very conscious of the resourcefulness of those involved in these forms of criminal activity and remains vigilant for, and ready to respond to, any new developments in these areas.