DÁIL SPEECH ON SALE OF ILLICIT GOODS BILL 2017

I am delighted to contribute to the debate. The illicit trade in cigarettes alcohol and solid fuel is reported to have cost the Exchequer up to €2.5 billion between 2010 and 2015. Of course, exact figures are difficult to come by but this is probably a conservative estimate. The problem became so acute that a group known as Retailers Against Smugglers, RAS, was established and is said to represent more than 3,000 small and medium-sized retailers throughout the country. Earlier this year an illegal cigarette factory was unearthed in Jenkinstown, County Louth, and RAS says that the fact that this factory existed at all demonstrated the demand for illicit tobacco products.

Deputy Breathnach introduced the Bill in April 2017 and I commend him and his Fianna Fáil colleagues, Deputies Lahart and Troy, for bringing it forward. Like other Deputies, I urge the Government to ensure the Bill progresses to Committee Stage. It provides for measures to tackle the illegal trade in alcohol, tobacco and solid fuel such as coal, briquettes and sod peat. Upon the passing of this Bill, it would be an offence to purchase these goods illegally and also to purchase them from unregistered or unlicensed retailers. It provides for the imposition of a €100 on-the-spot fine for purchasing tobacco, alcohol or solid fuel illegally from an unregistered or unlicensed seller. Of the estimated €2.4 billion in lost revenue, it is reported that smuggling of solid fuels accounts for approximately €435 million and smuggling of tobacco accounts for around €450 million.

The illegal cigarette factory in Louth was closed in March, and the photographs of the plant show the sheer scale of the operation. The capacity of the factory was reported to have been approximately 250,000 cigarettes per hour. Combatting this element of the so-called shadow economy is a high priority for the Revenue Commissioners, with a confidential illegal cigarettes hotline for reporting instances of illicit tobacco trade. According to the Revenue website, it works alongside An Garda Síochána, the Criminal Assets Bureau, CAB, European Anti-Fraud Office, OLAF, and Europol to combat this illegal trade, which costs the Exchequer so much in lost excise. Revenue also states that it works closely with agencies in the North to combat cross-Border illicit trade. This will become even more pertinent early next year, depending on how the Brexit negotiations pan out and the impact begins to be felt. When the Minister of State replies, perhaps we could get some information on the approach to dealing with Brexit in this regard. During this summer, 8 million cigarettes were seized at Dublin Port. Retail Ireland said that nine out of ten retailers on both sides of the Border believed that smuggling was damaging their profits and their ability to make a living.

It is an international problem. Reports say that approximately 85% of smuggled cigarettes in London were found to be counterfeit and there are seizures of at least 1 million counterfeit cigarettes daily in the UK. The illicit trade in tobacco in South Africa is reported to have doubled in the past number of years, and countries such as Malaysia, the Philippines and Indonesia are also reporting significant illicit trade in tobacco.

The Ceann Comhairle is probably interested in the paper that was written four or five years ago by Klaus von Lampe, Marin K. Kurti, Anqi Shen, and Georgios A. Antonopoulos on the changing role of China in the global illegal cigarette trade. I had raised several times in this House disturbing reports about the role of American tobacco companies in producing illegal cigarettes. However, this role seems to have been taken over by Chinese companies. The paper states:

While previously genuine cigarettes dominated the black market, in the past decade, counterfeit cigarettes have gained a significant market share, with the People’s Republic of China commonly assumed to be the main source [country]. Based on statistics on the seizure of counterfeit cigarettes … it has been estimated that between 93 [billion] and 186 billion counterfeit cigarettes [were being] produced in mainland China annually … According to another estimate, the number of fake cigarettes produced in China per year is even higher, reaching 400 billion [sticks].

China’s importance as a producer of what we call “bogey” cigarettes is underscored by seizure data, with the country found to be the ultimate source. I am not sure what they are called in the Ceann Comhairle’s local language. Do we know the sources of counterfeit and illegal cigarettes? Why should friendly countries, such as the United States, with which we have close ties, and China, with which we have ever-increasing economic and social ties, send these products here?

I welcome the Bill. I note that section 7(2) places the burden of proof on the purchaser and states: “It shall be presumed until the contrary is shown that the relevant taxes and duties … have not been duly paid.” That is a good provision. Section 8(1) makes it an offence to purchase alcohol products from a retailer or person who is not on Revenue’s list of current valid liquor licence holders. Section 9 gives powers to the authorised person, including the ability to stop someone he or she reasonably suspects of having purchased illicit goods. Section 11, for which I commend the Deputies, is important as it provides for test purchasing. I have regularly tabled questions to the Department of Justice and Equality about this. We must have test purchasing to ensure we can ascertain the number and location of places selling illicit and counterfeit goods.

I welcome the Bill. It is long overdue, and should make major improvements in the campaign to reduce the illicit trade in tobacco, alcohol and solid fuels, returning trade to smaller retailers, especially those in Border counties as Brexit edges ever closer.