Written answers

Thursday, 17 December 2020

Department of Finance

Customs and Excise

Photo of Brendan SmithBrendan Smith (Cavan-Monaghan, Fianna Fail)
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300. To ask the Minister for Finance the additional measures he will implement to counteract the illegal and cross-Border trade in tobacco and drink products and household fuel products; and if he will make a statement on the matter. [44401/20]

Photo of Brendan SmithBrendan Smith (Cavan-Monaghan, Fianna Fail)
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301. To ask the Minister for Finance the measures he will introduce to protect and support legitimate businesses trading in household fuel products due to the difficulties they face with illegal cross-Border trade in such products; and if he will make a statement on the matter. [44402/20]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 300 and 301 together.

I am assured by Revenue that combating the threat which fuel fraud and the illicit alcohol and tobacco trades pose to legitimate businesses, consumers and the Exchequer continues to be a priority. I am assuming that the Deputy, when referring to illegal cross-Border trade of household fuel products, is enquiring about the movement of home heating oils and solid fuel into the State from Northern Ireland.

Steps taken by Revenue to combat the illegal mineral oils trade, including home heating oils, include the introduction of stringent supply chain controls and reporting requirements, a rigorous programme of risk focused enforcement action and the application of robust legislation. 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.

Solid Fuel Carbon Tax (SFCT) is an excise duty that applies to coal and peat when first supplied in the State for use as a fuel. Neither the movement of solid fuel into the State nor the physical presence of solid fuel in the State generate a liability to SFCT. Therefore, there is no smuggling offence, in terms of evasion of SFCT, attaching to coal coming into the State from Northern Ireland. Solid fuel carbon tax is collected by Revenue on a self-assessment basis and compliance with the law is enforced using the full range of compliance interventions and enforcement provisions for self-assessed taxes.

Currently, there is no carbon tax on solid fuel in Northern Ireland. This factor, combined with that jurisdiction's lower VAT rate on solid fuel, lower environmental standards and currency fluctuations, can give rise to significant price differentials which incentivises the sourcing of solid fuel from Northern Ireland. EU Single Market constraints, which will still apply in Northern Ireland, preclude the use of any cross-border movement controls in the administration of SFCT. This means that solid fuel coming into the State from Northern Ireland is not subject to cross-border movement controls typical of harmonised excises on mineral oils, tobacco and alcohol. Revenue has no authority to stop vehicles and physically inspect loads of solid fuel. Similarly, Revenue has no authority to challenge transportation or possession of solid fuel that originated in Northern Ireland as such transportation or possession are not, in themselves, Revenue offences. Even if controls were possible, a person transporting solid fuel from Northern Ireland could legitimately claim that SFCT will be accounted for on relevant supplies made in the State. An SFCT return does not have to be made until one month after the end of the two-month accounting period in which the supply is made.

As I have previously highlighted to the Deputy, the collection of SFCT by Revenue is heavily reliant on the regulatory regime covering the marketing, sale, distribution and burning of solid fuels in the State. This regime is enforced by local authorities who have powers to inspect premises and vehicles being used for the sale and distribution of solid fuel, collect samples of coal to check for adherence to environmental standards and to prosecute traders involved in selling coal that does not meet these standards.

I am advised that at the beginning of 2020 Revenue participated in a number of “joint operations” within Low Smoke Zones in conjunction with the Department of the Environment, Climate and Communications and local authority solid fuel inspection teams, with a view to checking for compliance across several tax headings, including SFCT. Revenue participated in these operations, based on the clear understanding of the statutory responsibilities of the agencies involved. In addition, a SFCT compliance module has been included in Revenue’s ongoing Mineral Oil Tax national compliance project. This project, along with many other field-based compliance activities, has been impacted by Covid-19 restrictions since mid-March.

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. I am aware that Revenue takes appropriate action where illicit activity is detected and that this action is informed by intelligence on criminal activity and risk-based examination of commercial traffic and stock in retail premises.

In relation to the tobacco trade, I am advised that Revenue 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.

I am aware that 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 who operate across jurisdictions and are responsible for much of this criminality.

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 and remains vigilant for, and ready to respond to, any new developments in these areas.


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