BLACK MARKET trading, shoplifting and other crimes affecting retailers cost the exchequer €861 million each year, according to a new report commissioned by Retail Ireland.
The report, prepared for the industry group by EPS Consulting, suggests that the sale of counterfeit and smuggled goods has “now reached epidemic proportions”.
Illegal tobacco accounts for much of the calculated loss, costing the exchequer an estimated €526 million in lost excise duty and VAT, the report estimates.
Fuel laundering costs the exchequer €155 million, while shoplifting and theft costs €110 million, it states.
“The scale of the lost revenue means it makes economic sense to invest more in tackling the problem. Additional Garda resources are required and much tougher sentences are needed as a deterrent,” said Frank Gleeson, Retail Ireland chairman.
Mr Gleeson said it was vital that the retail sector, already suffering as a result of the collapse in consumer spending, was not “further squeezed” by criminal activity.
Retail Ireland, which is affiliated to employers’ lobby group Ibec, argues that the current levels of convictions for black market trading do not act as a deterrent and calls for a “zero tolerance” approach.
The report recommends that instead of being fined, people and businesses found guilty of black market offences should have State payments or benefits reduced to the value of the loss to the exchequer of the goods smuggled, counterfeited or stolen.
It also suggests Garda resources should be redeployed from areas such as road traffic policing into enforcement of trade laws and calls for more regular checks on casual traders to ensure that counterfeit products are not for sale. The redeployment of resources in this way would pay for itself in economic terms, Mr Gleeson said.
People who report illegal trades via a confidential hotline should be given a reward of up to €10,000 if their call results in a summary conviction, while an awareness campaign should be launched to alert consumers that illegal activity pushes up prices, the report adds.
To tackle illegal tobacco sales – estimated to account for as much as a quarter of all cigarettes sold in Ireland – the Government should introduce a consumer awareness campaigned modelled on the Dodgy Cigs poster and radio campaign run by the British department of health and UK revenue officials, the report recommends. A similar campaign, focusing on the additional health risks of consuming “dubious” products, should be launched to highlight the dangers of bootleg alcohol, it adds.
Retail Ireland wants more frequent inspections of fuel distributors to help reduce increasing rates of fuel laundering. It is estimated that about 12 per cent of all diesel sold in Ireland is illegal.
The Revenue Commissioners indicated in April that solid fuel merchants would be among those targeted for audits this year, as officials continue a crackdown on the evasion of excise duty on diesel.
Since 2010, 19 fuel laundries have been detected and closed, while 52 filling stations in breach of licensing laws were shut.
“In fairness to the Revenue, they have been doing a really good job here. But the problem is not getting fixed yet,” said Mr Gleeson. “We need to see some significant convictions.”
The estimates in the report are compiled from sources including the Irish Tobacco Manufacturers’ Advisory Committee, the Irish Petrol Retail Association, the Centre for Retail Research and black market specialists Havocscope.
At €250 million, the Revenue Commissioners’ estimate of the cost to the exchequer of illegal tobacco is less than half the industry estimate in the report.
“I would say the Revenue tends to be conservative, whereas the retailers have a more realistic view of it,” said Mr Gleeson. The black market in cigarettes is “hugely profitable” for sellers but ultimately cost local “corner shop” jobs as well as exchequer revenue.
