£85m: cost of illegal cigarettes to coffers
Illicit tobacco use in Northern Ireland is depriving the public purse of £85m a year, MPs have been told.
The Northern Ireland Select Committee heard 17% of the two billion cigarettes smoked in the province every year — some 350m — and 59% of hand-rolled tobacco are illicit.
Criminals could make £29m a year from selling them on. This is significantly higher than averages across Britain, of 13% and 54%.
Yesterday, tobacco firm bosses gave evidence to the committee, which is looking at the wider issue of smuggling as part of its investigation into fuel laundering.
They said the practice was costing Northern Ireland's 1,700 tobacco retailers £1,000 each a week.
The witnesses, from Japan Tobacco International, said high duty on cigarettes— £5 tax is paid on a £6.50 pack — was increasing smugglers’ profit margins.
The firm's UK head of corporate affairs, Paul Williams, said: “Prices going up will filter through to the criminals, saying ‘that's an extra margin we can make'.”
But the tobacco firm spokesmen were criticised by one MP for not lobbying hard enough for tougher enforcement tactics.
North Down MP Lady Sylvia Hermon said she was “surprised and disappointed” that they had not requested meetings with Northern Ireland's Chief Constable or Justice Minister.
Mr Williams said tobacco companies were given “very limited access” to the Government apart from the Inland Revenue.
He said: “We are very active, but unfortunately can't get access to government departments.”
Japan Tobacco International employs 950 people at its |manufacturing plant in Ballymena.
The largest haul of illegal cigarettes ever seized was at Greenore Port in Co Louth, when 120m were found on board a ship.
No studies are carried out on the quality of the tobacco in the |illegal cigarettes so it is not |possible to gauge the public health implications of the crime.
The committee also heard that the problem of illegally filled gas cylinders was on the rise.
Calor Gas director of corporate affairs, Tom O'Carroll, said it was costing his company £2m in lost revenue every year.
He branded the £300 fine |handed to a criminal caught repackaging gas cylinders in 2008 “a joke”, and warned that illicit gas could have safety implications.
He added: “If people do not operate according to those standards, the logic is that people could potentially be at risk.”
The 350m illicit cigarettes sold every year in Northern Ireland are of four categories:
- Standard fakes
- ‘Illicit whites’, made as far afield as the Philippines and destined for the black market.
- Cross-border purchases that exceed the legal limit.
- Cross-border smuggling.