Carol Nolan (Offaly, Independent)
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44. To ask the Minister for Finance the steps being taken to combat the sale of illegal tobacco products in Ireland, particularly in light of the increased black-market activity seen in other EU states such as France and Spain; and if he will make a statement on the matter. [3673/25]

Carol Nolan (Offaly, Independent)
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57. To ask the Minister for Finance the estimated tax revenue loss to the Irish Exchequer due to illicit tobacco trade; if this is expected to increase in the absence of clear EU tax policy guidance; and if he will make a statement on the matter. [3670/25]

Carol Nolan (Offaly, Independent)
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58. To ask the Minister for Finance if his Department has assessed the impact of the EU’s delayed Tobacco Tax Directive on the Irish legal tobacco market; his views on whether uncertainty around taxation is increasing the prevalence of illicit tobacco trade in Ireland; and if he will make a statement on the matter. [3672/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions No. 44, 57 and 58 together.

Across the EU, the taxation of tobacco products is governed by the Tobacco Products Tax Directive (2011/64/EU) which sets out EU rules on the structure and rates of excise duty applied to manufactured tobacco. The Directive defines and classifies various manufactured tobacco products according to their characteristics and lays down the relevant minimum rates of excise duty to be applied by Member States for the different types of products. The Directive aims to ensure the proper functioning of the internal market and a high level of health protection, while also deterring tax fraud, tax evasion and illegal cross-border shopping.

Every four years, the European Commission is required to submit a report to the Council on the rates and the structure of excise duties, accompanied, where appropriate, by a proposal for the revision of the Directive. In 2021, the Commission and Council concluded that an upgrade of the EU regulatory framework was needed in order to tackle current and future challenges to the functioning of the internal market by harmonising definitions and tax treatment of novel products (such as liquids for e-cigarettes and heated tobacco products, including products that substitute for tobacco), and avoid legal uncertainty and regulatory disparities in the EU. They concluded that revision of the EU regulatory framework could also address the issue of tax-induced substitution across products and enable further measures to combat the illicit trade in tobacco to address tax control, revenue collection and health protection issues. A review of the Directive, including proposals for revision of EU minimum tax rates and the inclusion of new products was expected to be published by the Commission in December 2022.

However, such review and reform proposals is still awaited and, in light of this continuing delay, in December 2024 my Department, along with similar authorities in fifteen other Member States made a joint statement calling on the new Commission to make the modernisation of tobacco taxation legislation a key priority for its upcoming term, and to present its proposal for legislative action no later than spring 2025.

I believe that it is very important that the Tobacco Tax Directive is updated to reflect the changing nature of the market and the products on it. I also believe that minimum rates should be increased as part of any review as a means of reducing the high levels of non-Irish duty paid products being brought into the State legally through Duty Free.

As you are aware, Ireland is long committed to a policy of high taxation of tobacco to encourage people to quit smoking. Government health and social policy has focused on the further denormalisation of smoking generally as consumption of tobacco products remains one of the greatest avoidable and preventable health risks in our society. Similar considerations arise in respect of e-cigarette products and other alternative products which is why legislation providing for a tax on e-liquids used in e-cigarettes was included in Finance Act 2024 and that new tax is due to commence later this year.

For several years, Tobacco Products Tax (TPT) annual receipts remained fairly stable at over €1 billion per annum, with successive annual rate increases offsetting the impact of reductions in the volume of tobacco products released for consumption. However, in the last couple of years, the tax receipts have seen a noticeable decline. Forecasting yields has become increasingly difficult due to the prevalence of illicit tobacco products on the market, high levels of non-Irish duty paid products being brought into the State legally through Duty Free, market trends towards ‘big box’ cigarettes and the uptake of novel products, such as e-cigarettes. In this environment, Revenue have previously indicated that further increases in excise duties may not lead to stable or increased revenue.

Since 2009, Revenue and the HSE’s National Tobacco Control Office have jointly commissioned surveys among smokers to estimate the volume of non-Irish duty-paid cigarettes consumed in Ireland. Since 2013, this includes a separate survey on roll-your-own (RYO) tobacco. The results of these surveys along with the survey methodology are published on Revenue’s website. The most recent survey conducted by Ipsos MRBI indicates that 19% or 32.9 million cigarette packs consumed in Ireland in 2023 were illicit, based on the estimated total cigarette consumption of a pack of 20 cigarettes. This represents a notional loss to the Exchequer of approximately €422 million (Excise and VAT). This is viewed as a notional loss as it assumes that the illegal cigarettes consumed displaced the equivalent full tax paid quantity of cigarettes, which is unlikely to be the case.

A summary of the illegal cigarette survey for the last number of years is provided below.

I am advised that Revenue uses a range of measures to tackle the sale of illicit cigarettes on the black market. At the core of these measures is identifying and targeting the smuggling of illicit tobacco products into the State, with a view to disrupting the supply chain, seizing the products and, where possible, prosecuting those involved. Revenue’s strategy involves developing and sharing intelligence on a national, EU and international basis, the use of analytics and detection technologies and ensuring the optimum deployment of resources on a risk-focused basis.

The smuggling of tobacco products has a transnational and cross border dimension and in addition to Revenue’s ongoing cooperation with An Garda Síochána in this area, Revenue also works closely with its counterparts in other jurisdictions including colleagues in Northern Ireland through the Cross Border Joint Agency Task Force (JATF) and international bodies including OLAF (the EU’s anti-fraud agency), Europol and the World Customs Organisation. Additionally, it works with Northern Ireland agencies to address cross-border smuggling and dismantle organized crime networks involved in the illegal tobacco market. Revenue monitors trends in the illicit tobacco trade, both nationally and internationally, on an ongoing basis and adjusts its actions and redeploys its resources in response to new developments or methodologies employed by the criminal gangs involved in that trade.

I am pleased to say that Revenue has achieved considerable success in tackling the illicit tobacco trade. Each year Revenue publishes in its annual report the volume and market values of tobacco seizures. A summary of cigarette seizures is provided in the table below.

In addition, Revenue seized 39,407kgs of tobacco with a value of €32.6 million in 2024 and there were 75 summary convictions and €189,277 in fines relating to tobacco offences imposed by the courts in 2024.

Revenue optimises media engagement in terms of successful prosecutions, significant seizures and enforcement initiatives, ensuring the general public is aware of the commitment by Revenue to tackling the illicit cigarette and tobacco trade and to deter those involved. To further encourage the general public to engage with Revenue in its efforts targeting the shadow economy and the supply of illegal tobacco products, Revenue includes a message on all press releases relating to tobacco products notifying that businesses or members of the public can contact Revenue in confidence on the free phone number 1800 295 295.

I am satisfied that Revenue is very conscious of the threat that tobacco smuggling and the sale of illicit tobacco products poses to health, to legitimate business interests and to the Exchequer. I commend Revenue and all the relevant State agencies for their work in this important area and I am satisfied that there is an appropriate focus on tackling this form of criminality.