CIGARETTE smuggling is costing the state hundreds of millions of euro in lost levies.
The illegal trade is reaching epidemic proportions and one estimate, for the losses to the exchequer per year by the end of 2010 of excise duties and VAT, has been put at €750 million.
ITMAC says the loss of much-needed revenue in times of recession was being fuelled by the lenient penalties and the huge profits smugglers can make and it says the issue needed to be addressed.
With a counter price of €8.45, Ireland has the highest average cost for a packet of 20 cigarettes in the EU.
In Spain, a packet of 20 would cost €3.10, €2.95 in Slovenia and €2 in Bulgaria. In non-EU countries, the retail price can be even less. In Belarus, a packet of 20 costs 92 cent, while it is just 74 cent in Ukraine.
In 1997, a packet of 20 in Ireland was €2.27 more expensive than in Spain. The gap has grown to €5.35.
ITMAC corporate affairs director Gerard Redmond said smugglers’ profits are vast. “One 40ft container shipped into this country from the Baltic would make the smuggler in excess of €1m in profit after the transportation costs were paid,” Mr Redmond said.
Customs officers who seized a total of 135 million cigarettes last year found them concealed in imported containers, computer hard-drives and furniture.
It is not just organised large scale smuggling. Eastern Europeans, in particular, are bringing in cheap cigarettes on flights.
Typically the illegal cigarettes end up being sold by people in pubs, bingo halls, car boot sales and supermarket car parks
Last year it was estimated that one-in-five cigarettes smoked in Ireland were illegal. Mr Redmond said this year it had risen to one-in-four and was heading to more than one-in-three. The average fine imposed on offenders selling illegal cigarettes so far this year was just €423.
Last year, there were 119 people convicted of the offence, none of whom received jail sentences.
“Legitimate retailers who breach the law on displaying or advertising cigarettes face fines from between €1,900 and €3,000. They could even lose the licence to sell cigarettes for up to three months. Yet the fines for those caught selling smuggled cigarettes are no deterrent whatsoever,” Mr Redmond said.
ITMAC also wants the Government to give Customs more manpower to tackle smuggling. Mr Redmond said new legislation should increase fines significantly and also impose penalties on people who purchase illegal cigarettes.
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