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Fuel laundering costs Ireland 150m Euros a year

28 October, 2011

Retail Ireland, the IBEC group that represents the retail sector, has called for tax reform and a better resourced Garda and Revenue response to illegal diesel laundering.

In a submission to government, the group said the sale of cheap, illegally laundered diesel is seriously damaging the public finances, funding criminality, harming the environment and adding to the already serious difficulties facing forecourt retailers. The group said illegal laundering costs the State at least €150 million in lost tax revenue every year.

Retail Ireland chairman and Topaz retail director Frank Gleeson said: "Rising prices have encouraged criminals to exploit the substantial difference in price between diesel intended for agricultural use and for road use.

A very conservative estimate would suggest that diesel laundering costs the Exchequer €150 million annually and is becoming more of a problem due to the increasing price of legitimate diesel. Recent import figures would suggest that at least 12% of all diesel sold in Ireland is illegal.

In a submission to government, Retail Ireland made the following recommendations:

· Equalise the duty rates for agricultural fuel and motor fuel. Such a move would help quickly diminish the illegal fuel trade as lower taxed fuel would not be available.

· Introduce a reclaim system for agricultural fuel users.

· Introduce a robust marker to agricultural gasoil that is easily detected by Revenue, and employ an audit scheme from port to forecourt that offers traceability of the fuel product.

The group also said premises selling diesel should be subject to the same licencing requirements as petrol is under the Dangerous Substances Act, No. 10 of 1972 so that filling stations and sites selling illegal diesel can be closed and called for an increase in the penalties imposed on persons who engage in this criminal activity.

The current fines are not a sufficient deterrent. Fines of €1,290 for offences have been recorded but these small fines are not a sufficient deterrent to criminals as they are disproportionate to the vast profits being made.

"While the recent seizures and arrest are highly commendable, resources should be redeployed within the Customs Service and An Garda Síochána to tackle fuel laundering. This would be self-financing, would help reduce State borrowing and would put criminals out of business," said Mr Gleeson.

"Legitimate fuel retailers are already struggling to survive in a difficult economic market. Their livelihood's are being threatened because they are being undercut by cheaper laundered diesel. In most cases filling stations involved in the illegal trade are run by individuals that are aware that the fuel they are purchasing and selling on to motorists is laundered. Some stations have been opened illegally on vacant sites specifically for this purpose.

"There is a further negative knock-on effect for legitimate forecourt retailers as their stores suffer from the effects of fewer customers entering the premises and thus reduced ancillary sale of groceries. The inevitable consequence is fewer hours worked, job losses and in some cases business closures.

"There is a misconception that the majority of laundered fuel is only available in border counties. However, illegal fuel has been discovered in Galway, Roscommon, Westmeath, Offaly and Dublin. This suggests that the illegal fuel market is spreading in Ireland," concluded Mr Gleeson.