Black market trade in cigarettes ‘costing economy’ up to €1.5 billion

The black market is costing the Irish economy up to €1.5 billion with the illicit trade in cigarettes accounting for over a quarter of all cigarettes sold in some cities, a new survey has found.

According to the study by accountancy firm, Grant Thornton, and Retail Excellence Ireland, the Government is losing €937 million in lost tax revenues while a further €537 million is lost by retailers and intellectual property holders.

The study entitled Illicit Trade in Ireland: Uncovering the cost to the Irish economy is being unveiled at a conference in Cork today, hosted by Grant Thornton in Cork .

It found that the black market is having a serious impact on the Irish economy.

According to Brendan Foster of Grant Thorton, "illicit trade is costing the Exchequer hundreds of millions of euro at a time when every cent of tax revenue is vital to the recovery of the country.

“Our own recently opened practice in Cork City is already working closely with local businesses, some of whom are finding it next to impossible to compete against fraudulent goods being sold by organised crime gangs in the city and county.

“These illegal actions must be stamped out to avoid further business closures and job losses. We must wake up and see that illicit trade has a significant impact on both businesses and the Government’s ability to implement its policies.”

Mr Foster revealed that a survey of discarded cigarette packs on the streets and in bins in Cork found that 30.3 per cent were non-domestic, compared with 27.7 per cent when surveyed a year ago, but Cork was far from unique in that regard.

Cork ranks 7th out of 22 cities and towns surveyed with the three worst affected areas being Drogheda where 32.8 per cent of discarded pak were found to non-domestic while in Tallaght and Athlone, there were similar high findings at 32.8 per cent and 32.4 per cent.

“It will be extremely challenging to implement public policy objectives on smoking if a quarter of Irish smokers buy their cigarettes on the black market, beyond the scope of any public health regulation,” said Mr Foster.

In addition to cigarettes, the report also studied the fuel, digital entertainment/software and pharmaceutical sectors with the estimated financial losses to the state equivalent to 12 per cent of the total interest bill of € 8 billion the government expects to pay in 2013.

Chairman of Retail Ireland Frank Gleeson said that it was clear to him from discussions with colleagues across Europe that there is a need for a consistent and integrated approach across Europe to combat criminals and smugglers.

“In the area of cigarettes, for example, it is hard to see the logic of the Irish government proposing plain packaging at the same time as the British government has decided to reject it because it fears lost revenue due to increased smuggling,” he said.