Noonan critical of tobacco trade

Minister for Finance Michael Noonan believes the tobacco trade could be complicit in the sale of illegal cigarettes.

“I have a suspicion that the legitimate trade is involved in the production of illicit cigarettes as well,” he told the Dáil.

Mr Noonan also rebuffed tobacco giant Philip Morris over its claim that the Government's plans to introduce plain packaging that would ban tobacco branding, could lead to very high compensation for manufacturers.

He said the Government would not be diverted from its plan “by any correspondence we receive from vested interests”.

Moreover, he warned that the price of tobacco products in Ireland, among the highest in the world, was contributing to the illegal trade.

“Ordinary, decent citizens” were buying illicit cigarettes and tobacco mainly for price reasons. “As we continue to use price to discourage people from smoking I think we will divert more and more of the trade to the illicit trade.”

He said “nobody checks whether they are carrying more than 800 cigarettes”, the EU’s indicative level for personal use.

Illegal sales
The limit for passengers travelling from countries such as the US or Canary Islands, where EU VAT and excise rules do not apply, is 200 cigarettes.

Mr Noonan was responding to Labour TD Robert Dowds who expressed concern at the significant level of illegal sales in Ireland of between 15 per cent and 30 per cent of total sales.

Mr Dowds said that in 2011 an estimated €707 million worth of illegal cigarettes were sold, a loss of €258 million to the exchequer.

He asked if the Minister could introduce the same restriction of 200 cigarettes that applies in Finland as the legal maximum any individual could bring into the State.

Mr Noonan replied that in the year to date more than 38.6 million cigarettes and more than 4,000 tonnes of tobacco were seized but this was lower than amounts seized in previous years.

In 2012 95.6 million cigarettes were seized while in 2011 some 109 million cigarettes were seized. He believed smugglers were moving away from large consignments to smaller amounts which were harder to detect and resulted in lower volumes of seizures.

He said much of the illicit trade was driven by people posing as tourists to go abroad to buy cigarettes to bring into Ireland.

“They can use these low-priced flights to go to countries where cigarettes are much cheaper than they are in this country.”

Low-cost flights
He added: "I have a suspicion that the legitimate trade is involved in the production of illicit cigarettes as well. People are able to buy very cheap cigarettes in other countries and bring them to Ireland."

He said an examination of the cost of flights showed “how quickly a profit can be made, especially by those who are prepared to travel a couple of times a week”.

But “the crackdown will continue” even though “the major price incentive associated with buying illicit tobacco makes it difficult to stop this activity”.

However, there had been successes with 132 convictions last year and 47 custodial sentences, some suspended as well as fines of €246,000. This year to date there have been 87 convictions and 32 custodial sentences although some were suspended with total fines of €147,750.

Mr Dowds, who highlighted concerns of a local shopkeeper, said he had to let two staff go because of the decline in legal sales of tobacco while another shopkeeper said 30 per cent of discarded packaging outside his premises was from illegal tobacco products.

He condemned Philip Morris and Mr Noonan said the Government would not be distracted by vested interests.