Irish referendum to cost €30 million

Ireland is to hold a referendum in May or June to test public opinion about the European Stability Treaty after the Government was advised by the Attorney General.  The AG pointed out that the Treaty is outside the scope of the architecture of the EU.  But referendums do not come cheap.

The cost of promoting the two referendums on the Lisbon Treaty each cost close to €5 million.

The Referendum Commission was established in 1998 to oversee the information campaign connected to any referendum.  The legislation providing for the establishment of a Referendum Commission is the Referendum Act 1998 as amended by the Referendum Act 2001.

Under the Referendum Act 1998 the Commission initially had the role of setting out the arguments for and against referendum proposals, having regard to submissions received from the public. Since the passing of the Referendum Act 2001 the Commission no longer has a statutory function in relation to putting the arguments for and against referendum proposals. The 2001 Act also removed from the Commission the statutory function of fostering and promoting debate or discussion on referendum proposals.

The direct costs of informing the electorate about the Lisbon Treaty in 2008 and 2009 were:

 

	2008 €	2009 €
Advertising, excluding press	1,535,545	1,148,331
Legal cost	59,530	51,170
Press and PR	1,901,331	1,286,558
Postal and distribution	1,042,317	265,519
Design and printing of publications	357,821	180,603
Other administrative costs	70,199	140,263
Translation	5,713	2,921
Office supplies	2,827	7,356
	€4,975,283	€3,082,721

 

The returning officer apparatus to actually conduct the vote will cost in the region of €15 million and postal charges to distribute information and ballot details will add another €12 million.

All told it is a day out that will cost as close to €30 million as makes not difference.

Ó’Snodaigh’s rapacious appetite for printer cartridges is implausible!

The value of the printer cartridges that Aengus Ó’Snodaigh TD of Sinn Féin is alleged to have taken from the Oireachtas is stated to be of the order of €50,000 and to have been sufficient to print 3 million pages. 

The Labour Party and Fianna Fáil spent less than €52,000 between them on the 2011 campaign, so how could second tier TD manage to use so many cartridges? 

There are 80,268 voters in Dublin South Central.  This printer cartridge trawl had the capacity to produce 3 million pages.  Is this delirious buffoon seriously alleging that each voter received 37 pages of text from him?  Ó’Snodaigh’s ranks eighth among Sinn Féin TDs after Adams, Doherty, Ó’Caoláin, MacLochlainn, Ellis, Crowe and Ferris - when the votes won are expressed as a percentage of quota.

Ó’Snodaigh spent a total of €14,061 in the 2011 general election campaign, of which €8,700 was reimbursed by the State.  He spent €23,500 in the 2007 campaign but he managed to win 2,000 more votes last year despite spending less money.

His spend in 2011 was equivalent to an average of €2.07 for each of the 6,804 first preference votes he won (80.2% of quota in Dublin S Central). The average expenditure by successful Sinn Féin candidates in that election was equivalent to €1.73 per vote won.  McDonald spent €4.51, Tóibín €3.02 and Colreavy €2.69 per vote won.

The breakdown of his spending in the 2011 campaign was:

Advertising	€ 806
Election Posters	6,103.91
General Printing	6,198.68
Office Stationary	688.75
Transport and Travel	220.00
Campaign workers	44.65
	€14,061

 

 

 

 

 

 

 

 

All the political parties spent a total of €68,975 on general printing in the 2011 campaign, of which Sinn Féin accounted for just €3,793.

Apart from his TDs salary of €92,672 he also received, tax-free allowances and reimbursements amounting to €52,565 (election expenses reimbursed €8,700, Parliamentary Standard Allowance €31,865 and Travel and Accommodation expenses of €12,000).  On top of that Sinn Féin received a Party Leader’s allowance last year of €893,432 as well as substantial funding under the Electoral Acts.

And he has the audacity to say that the Oireachtas is to blame for him taking so many cartridges because nobody cried ‘halt’!  What a wimp!

Irish politicians spent 47% more on electioneering than Ulster counterparts

This weekend marks the first anniversary of the election of the 31st Dáil, an election that attracted 566 candidates to contest the 165 seats (the Speaker/Ceann Comhairle is returned automatically)

The election cost the political parties and candidates a total of €9.27 million, – 16% less than the €11.08 million spent on the 2007 general election, even though 100 more persons contested the election

The following table summarises the spending by party and the cost of each first preference vote:

Party	1st Preference Votes	Total Expenditure€	Spend per 1st Preference Vote €
Fianna Fáil	378,358	2,138,792	5.65
Fine Gael	801,628	3,120,237	4.89
Labour	431,796	1,956,812	4.53
Green	41,039	496,928	5.93
Sinn Fein	220,661	496,928	2.25
People Before Profit	21,551	47,756	2.22
Socialist	26,770	85,124	3.18
Christian Solidarity	2,102	20,113	9.57
Workers P	3,056	11,986	3.92
S Kerry All	4,939	15,347	3.11
Independents	279,459	1,411,176	4.08
TOTAL	2,211,459	€9,277,637	€4.20

 

A total of €2.36 million was spent reimbursing 327 candidates who obtained a quarter of a quota, or more.  This accounted for 28% of the total expenditure during the regulated period – which started the date the Dáil was dissolved on 1 February 2011 until the date of the general election, 25 February 2011.

The cost of each vote in the Northern Ireland Assembly election last year was €2.21, 47% less.  The 218 candidates contesting the 108 seats in the Northern Ireland Assembly spent a total of €1.17 million electioneering during the regulated period – which extended from 25 March 2011 to election day on 5 May 2011.

Britain’s diplomatic footprint in the EU cost €139.7 million in 2011

The net operating cost of the United Kingdoms 26 embassies in the European Union was €139.7 million in the year to April 2011.  There are 1,610 staff employed in them and a further 190 in other outlying offices. The combined value of the Estate they occupy is €620 million, equivalent to 28% of the value of the entire British global diplomatic real estate.

The details are as follows:

Member State	Net Cost €	Staff	UK-EU Trade Balance € Million
Austria	6,588,852	55	-1,384
Belgium	8,154,094	65	-3,574
Bulgaria	3,557,057	45	49
Cyprus	4,396,278	65	633
Czech Republic	4,474,088	55	-2,740
Denmark	5,329,929	45	-3,470
Estonia	2,252,934	30	97
Finland	4,633,783	45	-973
France	10,404,191	180	352
Germany	18,265,923	195	-17,626
Greece	7,447,903	75	567
Hungary	5,046,866	55	-2,266
Ireland	2,677,721	45	4,605
Italy	1,598,241	110	-4,064
Latvia	1,753,997	30	-173
Lithuania	1,753,997	35	-342
Luxembourg	1,622,872	10	-730
Malta	2,718,592	25	293
The Netherlands	5,568,743	60	-5,726
Poland	7,788,793	75	-42
Portugal	4,596,941	50	-402
Romania	4,018,078	55	-1,122
Slovakia	2,034,140	25	-116
Slovenia	1,882,916	20	-1,265
Spain	14,079,798	110	-1,491
Sweden	5,323,435	50	-4,226
	€139,746,957	1,610	-€48,492

 

The EU accounts for 54% of global exports and 51% of global imports but Britain ran an adverse trade balance in 2011 with 20 of the 27 member states of the EU.  The combined value of her positive trade balance with Bulgaria, Cyprus, Estonia, France, Greece and Malta was €1,911 million.  But her positive trade balance with Ireland was a whopping €4,605 million.

Ireland accounts for 11% of Britain’s exports to the EU and Ireland supplies  6% of Britain’s import from the EU. 

The entire British global diplomatic enterprise consists of almost 270 offices and a staff of 10,500 persons located outside the UK. A further 3,000 are employed in the UK.

The estate of the Foreign and Commonwealth Office was estimated to be worth €2.2 billion on 30 September 2010, of which property worth €1.93 billion is located outside the UK.  The IT infrastructure alone represents an investment of €38 million while the embassy network is home to antiques and silver worth an estimated €10 million.

The largest investment in embassy offices is in France €43 million, Hong Kong €30 million, New Delhi €17 million, Rome €19.75 million, Dublin €16 million and Moscow €13 million. The most valuable official residences are located in Paris €33 million, Rome €25 million, Athens €13.5 million and Washington DC €8 million. The British Ambassador’s residence in Dublin is valued at €5 million.

The British have closed their embassy in Mali, El Salvador, Honduras, Nicaragua, Madagascar, East Timor and Paraguay. The have closed consulates in 18 locations around the world. Seven embassies and six consulates have been opened since 1997.

The budget for Ireland’s overseas missions this year is €53 million, figure comparable to the cost of ‘free’ television licences purchased by the Department of Social Protection.  Ireland’s diplomatic force employs a total of 555 persons.

What a difference a century makes!

One hundred years ago the population of Ireland was 4,390,219 - of which 1,250,531 lived in what is now Northern Ireland. There were 202,810 persons in receipt of old age pension which cost the State £2,588,600 (€3.29 million). This meant that the amount received annually was €16.20.

Today, the population of Ireland is 6,380,269 - of which 1,799,000 live in Northern Ireland. There are 608,825 persons in receipt of old age pensions (contributory, non-contributory, transition) in the two jurisdictions which cost both governments €4,662,442,600. an average of €7,658 per recipient.

pension regulations were austere a century ago and if a pensioner had to be hospitalised his, or her pension was stopped. The Kilkenny County Pension Committee, for example protested against the hardship caused to old age pensioners obliged by illness to go temporarily into the local infirmary or hospital by the stoppage of their pension, under an amendment to Old Age Pensions Act, before the question is entertained by the committee. One typical case of a pensioner who on leaving the infirmary had, through the stoppage of his pension, to return to the workhouse as an ordinary inmate, thus incurring fresh disqualification for the pension, and being thrown unfairly for support on the ratepayers.

Another example of rigour concerned John Wilson, of Knockmanoul, County Fermanagh, who claimed an old age pension in September, 1910, and was recommended by the pension officer for a pension of 3s. a week (€0.15), and that on such recommendation his case was considered by the pension committee of County Fermanagh, who knew his circumstances and the house and locality in which he lived, and who decided that he was entitled to a full pension of 5s (€0.25). But this decision was reversed on appeal by the pension officer against the granting of a higher pension than 3s., when the Local Government Board decided that his yearly means exceeded £31 10s. (€40) and that he was not therefore entitled to any pension. Wilson's only means were £100 (€127) in the bank at 2½%., and his free support and residence in the house of a relative, who is a farmer. The Local Government Board decided that his support and residence in an ordinary farmer's house were valued over £29 10s. (€37.50) a year.

Hiscase was examined by an inspector who concluded that the farm in question comprises 60 acres of land, of which 25 acres were under tillage, and the remainder were being used for grazing. On the farm the inspector found 11 cows, 11 yearlings, 7 calves, 2 horses, 1 foal, 4 pigs, and 100 fowl. The house was deemed a very commodious and neatly furnished residence. The total valuation of the house and land is £86 (€109). Having taken all these circumstances into consideration, in conjunction with the fact that the claimant had £100 standing to his credit in the bank, the Board could not regard him as entitled to any pension.

Britain pays Ireland over €1 billion for the healthcare of British pensioners in Ireland

Under a European Union Directive introduced in 2004, if someone is in receipt of a state pension from two or more members states but not from their member state of residence, the member state where that person has the longest record of contributions is liable for their state healthcare costs.

The United Kingdom has paid €1,202.1 million to Ireland from 2007 in compliance with this regulation in respect of UK pensioners living in Ireland while Ireland paid the United Kingdom €98.2 million in respect of Irish pensioners living in the UK.

The annual sums paid to Ireland were 2008 €450 million; 2009 €108.1 million; 2010 €353 million and 2011 €290 million.

The annual sums paid by Ireland were 2008 €25.4 million; 2009 €24.4 million, 2010 €25.4 million and 2011 €22.8 million.

Claims are made in arrears, sometimes several years in arrears. Payments made in any one year will therefore relate to claims for previous years and do not reflect the value of claims made in that specific year. The timing of payments can therefore vary significantly and have a bearing on the totals paid or received.

A person who is ordinarily resident in the UK is entitled to access National Health Service treatment free of charge. Nationality is not a criterion in establishing ordinary residence. This EU Regulation enables a member state to claim the cost of healthcare for posted workers, pensioners and their dependents and the dependents of workers who have registered as residents in another member state to that which is liable for the cost of their healthcare. A British person resident in Ireland, for example, should hve the same entitlement to access the Irish healthcare system as other residents of the country

Irish Aid - €6 billion spent in an unregulated sector with low standards of accountability

The media controversy in Ireland surrounding the boutique charity GOAL has drawn attention to the standard of public accountability and transparency of its principal sponsor Irish Aid, the State’s Overseas Development office. GOAL is one of a small number of Irish charities that participate in a Multi-Annual Programme Scheme intended to provide long-term funding to alleviate distress in a small number of countries. This programme was started in 2003 and by the end of 2011 it had spent over €477 million out of a total Irish Aid spend of over €6 billion during that time.

Ireland ranks ninth in the world after Norway, Luxembourg, Sweden, Denmark, Netherlands, Belgium, UK and Finland in terms of the proportion of GNI committed to overseas aid. The tax revenue of these countries expressed as a percentage of GDP is significantly higher than in Ireland. Its is 42.4% in Norway, 38% in Luxembourg, 48.5% in Denmark, 39.5% in The Netherlands, 46.4% in Belgium, 37.4% in the UK and 42.3% in Finland. The corresponding figure for Ireland (in 2010) was 29.8%.

But Ireland is also the 8th most indebted country in the world in terms of the ratio of General Government Debt to GDP, currently at 110%. When it comes to debt burden Ireland follows Zimbabwe (238.8%) , Japan (208.2%), Sint Kitts & Nevis (185%), Greece (165.4%), Lebanon (137.1%), Iceland (130.1%), Anigua & Barbados (130%) and Jamaica (126.5%).

The year 2003 is significant in the sense that Irish tax receipts then broadly mirrored those of last year (€32 billion versus €34 billion). The Irish Government committed €445.7 billion to overseas development aid in 2003 and the exchequer deficit was €979 million. The ODA budget in 2003 was equivalent to €360 from each income tax payer, who also carried a €35,000 share of the General Government Debt that year.

GOAL obtained €8 million to spend on its multi-year projects, but did not publish audited accounts then, or subsequently to inform the public how it spent State money and how much it cost to deliver the services it provided.

The Irish Aid Programme carried out an internal audit of the taxpayers’ money GOAL spent in 2009, which was of the order of €12.8 million on MAPS toward which it was to have added €4.26 from voluntary public donations. The GOAL expenditure that year was €1.5 million, well short of its 25% matching criteria. The audit took four months to complete but it took GAOL six months to respond to the preliminary findings of the audit, a critical feature of which concerned the sharply declining funding levels that GOAL was capable of providing through donations.

It is noteworthy from the perspective of accountability and transparency that this audit did not publish the audited accounts of GOAL. But the 2010 Annual Report of Irish Aid did not publish a list of the recipients of the €675.84 million that it dispersed in 2010. There was plenty of financial pebble-dash about the relationship of Overseas Development Aid to Irish Gross National Income; the various initiatives and sectors toward which bilateral aid was directed. There was a geographical analysis of where Irish taxpayers money was spent and the nature of the projects it was spent on but no comprehensive list of the recipients and the cumulative amount of money each received from Irish taxpayers.

The annual contribution of taxpayers to Irish Aid has increased by 67% from €360 per capita in 2003 to €600 in 2009. But General Government Debt per income tax payer increased from €34,969 to €86,929 in 2009 and upwards to €136,654 in 2011 with the prospect of increasing further to over €154,000 by the end of 2013. Ireland's exchequer deficit was over €24 billion last year, over €6 billion higher than in 2010.

Where to for overseas development aid? Where to for public accountability and where to for transparency and governance? At what cost will the Irish Government contain its GGD/GDP ratio to 3% by 2014?

Public service broadcasting in Ireland is doomed if its financing is not removed from An Post

When it comes to the funding of public service broadcasting the Irish postal service, An Post, is in the dark ages with an appalling, insular incapacity to curtail television licence evasion compared to its UK counterparts and it imposes significantly higher collection costs.  It displays all the hallmarks of a complacent, apathetic public bureaucracy, even though the guy running it is paid €500,000 per annum. The consequences are that the television licence fee is higher than it need be and the sector is losing tens of millions of euro in funds that it is legally entitled to.

Current television licence sales appear to be of the order of 1.4 million per annum.  They ought to be in the region of 1.8 million, given the rise in the occupied stock of houses and considerable scope to increase television licence take-up in institutions and businesses.

RTÉ is the recipient of approximately 90% of the television licence fee which is worth approximately €200 million per annum. The balance goes in collection costs (5.8%) and to the Broadcasting Authority of Ireland.  If An Post was effective RTÉ would be getting another €30 million from licence fees without any increase.

Advertising is the largest component of commercial revenue at RTÉ but advertising revenue declined by 34% to €134 million from 2007 to the end of 2010. Total RTÉ revenue has declined from €405 million in 2006 to €371 million five years later.

Sole responsibility for selling of television licences rests with An Post, which seems to approach this task from an insular,  candlelit Dickensian back office. 

The BBC direct and control the television licence activity in the UK. Approximately 26.4 million British households (97% of all households) have a television licence that costs £145.50 for a colour television. They provide annual revenue of £3.56 billion to the BBC, of which 66% goes to its ten television channels; 17% to its seven national radio stations and a plethora of local radio stations; 8% is spent online and the remaining 11% goes on ‘other costs’. Television licence fee evasion in the UK has been 5.3% for the past decade. The cost of collecting British television licence money is 5.3% compared to over 9% in Ireland.  The scale is much larger obviously but the approach is more professional.

British television viewers must have a valid TV Licence if they or record television programmes as they're being shown on TV. It makes no difference what equipment they use - whether it’s a laptop, PC, mobile phone, digital box, DVD/video recorder or a TV set – they still need a license. There is no such simplicity in Ireland.

Irish law requires households, businesses or institutions which possess a television set, or equipment receiving a television signal – and that includes a ‘broken’ television set. But a viewer in Ireland does not require a television licence to watch television on a computer or mobile phone, unless the computer is used with another apparatus to receive a signal.

There are approximately 1.4 million television licences sold in Ireland at €160. Approximately one quarter of these (348,000) are paid for by the Department of Social Protection and issued as a component of their Free Television Licence scheme.

An Irish television licence is required by a householder and a business operator, although the web site of An Post is so slovenly that no mention is made of ‘business’ or ‘institution’, nor is there a different approach to meet the needs of business owners – be they shopkeepers, in the hospitality business, nursing homes, hospitals, clubs and communities, residential landlords, schools and colleges etc.

Preliminary estimates from the 2011 Census indicate that, despite there being 294,000 vacant houses in Ireland, the housing stock in Ireland has risen since 2006 by 14% to 1,709,000 residences. An Post also has over 500,000 businesses and institutions on its data base, a substantial number of which are likely to have television sets.

If any headway is to be made by An Post it must radically overhaul how it communicates to those obliged to have a television licence, or some other competent entity must take on this role, perhaps RTÉ. It functions on a one-size-fits-all basis and there is no provision for the needs of, or information for business people or those in charge of institutions. Who at this monolithic organisation is responsible for generating television licence revenue?  Who is responsible for customer relations? Other data including the number of television licences in issue ought to be readily accessible; the number of holders of more than one television licence; the numbers of television licence holders in the business and institutions’, community; the number of licences held by those with second homes and caravans. Deals ought to be available to those with volume requirements.

The public need to know what a single television licence will cover and what a single television licence will not cover; what the position is with respect to television licences covering multiple sites

Twelve one-man-band ‘leaders’ among a 60-person Irish Senate

The Oireachtas (Ministerial and Parliamentary Office) (Amendment) Act 2001  provides that members of a political party elected to Seanad Éireann at the last preceding general election or a subsequent bye-election, or nominated to it after the last preceding general election, as members of that party may qualify for the following allowances as parliamentary leaders —

(i) an annual allowance of €31,743, where not more than 5 members of that party are so elected or nominated, and

(ii) an annual allowance of €15,872, where more than 5 members of that party are so elected or nominated.

This allowance, which is free of income tax, maybe spend as follows:

(a) the general administration of the parliamentary activities of a qualifying party

(b) the provision of technical or specialist advice likely to be required in connection with legislative proposals or potential parliamentary initiatives

(c) research and training

(d) policy formulation

(e) the provision of consultants’ services, including the engagement of public relations consultants

(f) polling or public attitude sampling in connection with parliamentary debates or initiatives

(g) the purchase of support services for a parliamentary party from the party

(h) the payment to a parliamentary leader of any salary or honorarium in respect of duties arising from his or her activities as such leader as distinct from those of a member of Dáil Éireann or a holder of a ministerial office,

(i) the payment to another person of any salary or honorarium in respect of duties arising from the person's activities in a parliamentary party,

(j) the provision for, or recoupment of, transport and personal expenditure incurred by a parliamentary leader, officers or a parliamentary party spokesperson as a result of their parliamentary party function,

(k) entertainment

Seanad Éireann #24 convened for the first time on 25 May 2011 and met on a subsequent 67 days in 2011.  It has emerged that among the 60 senators twelve are being paid a parliamentary leader’s allowance – although not one of them is apparently representing on of the 18 political parties listed in the Register of Political Parties in November 2011.

The 68 sitting days have cost €2,339,883.05 in direct remuneration, €1,322,093.95 paid free of tax in respect of travel and accommodation and €169,181.64 to pay the ‘12 parliamentary leaders’.  Those receiving the parliamentary allowances include 7 nominees of the Taoiseach:

Senator	Parliamentary Leader’s Allowance	Travel & Accommodation	TOTAL
Barrett, S	15,913.41	22,020.03	37,933.44
Coughlan, E	14,394.35	10,003.32	24,397.67
Crown, J	15,914.49	11,058.97	26,973.37
McAleese, M	3,247.63	5,117.77	8,365.40
MacConghaill, F	14,394.35	3,000.00	17,394.35
Mullen, R	15,913.40	11,058.97	26,972.37
Norris, D	15,913.40	11,058.97	26,972.37
O’Brien, MA	14,382.25	21,299.44	35,693.69
O’Donnell, ML	14,394.35	10,003.32	24,397.67
Quinn, F	15,913.40	11,058.97	26,972.37
vanTurnhaut, J	14,394.35	10,003.35	24,397.67
Zappone, K	14,394.35	19.918.05	34,312.40
TOTAL	€169,181.64	€145,601.13	€314,782.77

Independent TDs and senators pocket over €1 million in tax-free allowances in ten months

By the end of 2011 the General Government Debt in Ireland was equivalent to 107% of GDP and is forecast to reach 115% of GDP this year. General Government Debt was just €47.4 billion in 2007 (24.9% of GDP).

Despite this trend and cutbacks across the spectrum of public spending the annual tax-free allowances paid to Irish parliamentary leaders of ‘qualifying parties’ has increased by 10.3% since 2007 to €8,410,899.

The ostensible purpose of a parliamentary leader's allowance is rather broad and includes administation of parliamentary activities, research and training, entertainment, the payment of an honorarium to the parliamentary leader in respect of duties arising from his, or her activities as a leader (of a one-man-band), as distinct from those of a member of Dáil or Seanad Éireann and the provision of transport for the leader and the recoupment of expenses.

The outcome of the 2010 general election has meant that there has been substantial change in who gets what. The amount paid to the Leader of Fianna Fáil has reduced by €1,056,437 per annum since 2007 while the disappearance of The Green Party and the Progressive Democrats has ‘saved the State’ €655,306.

But Fine Gael are pocketing an extra €243,025; the Labour Party has an extra €390,132 and Sinn Féin is being paid an extra €787,033 while the Socialist Party has scooped an extra €143,040.

The really big change, which accounts for the bulk of the additional overall expenditure goes to Independent TDs who reaped a total of €897,876 last year and People Before Profit who are now paid €143,040 – a combined total of €1,040,916 to 'new boys' since 26 February 2011. The only Independent TDs who was not personally paid an additional €34,783.20 was Mick Wallace, Denis Naughten,

Independent senators pocketed a total in €169,180 last year, although true to his word, Senator Martin McAleese was not paid this allowance when his wife was President.

The Independent TDs have almost been as politically incoherent as Fine Gael backbenchers – the posse whose preferred candidate that captured 6% in the presidential elections. Their iconic contribution to the political enterprise has been to organise a campaign to subvert the legislation governing the Household Charge and to waffle about a Constitutional referendum in connection with the already signed treaty that underpins the fiscal compact.

Lower UK Corporation Tax rate raised tax receipts from manufacturing companies

Corporation Tax (CT) is a direct tax charged on the profits made by companies. The Irish Revenue Commissioners collected €3.5 billion (10.3% of all taxes) in 2011. CT also represents 10% of all taxes in the UK. The Irish collected €6.4 billion in CT receipts in 2007 when the Celtic Tiger was in full gallop and that represented 13.5% of all Irish tax receipts that year.

Ireland charges CT at the rate of 12½% on trading income and 25% on passive income. The main rate of CT in the UK was reduced from 30% to 28% from 1 April 2008 and to 26% from 1 April 2011.

The impact of these changes was that British Corporation Tax receipts rose in 2011 by 18% to £42.1 billion and the industrial and commercial sector accounts for 61% of the total.

UK Corporation Tax receipts in the past decade peaked at £46.4 billion in the year ended April 2008. This sum included £5.7 billion in respect of North Sea oil companies; €4.4 billion from manufacturing companies; £5.7 billion from the Distribution Sector; £18.1 billion from other industrial and commercial companies in Britain and overseas companies; £10.2 billion from the Financial Services sector and £700 million from life assurance companies.

The impact of lower CT rates since 2008 has subsequently increased CT receipts from manufacturing companies to £5.3 billion – a record high level of receipts throughout the past decade. The number of manufacturing company taxpayers remained in the region of 25,000+ during this period. But CT receipts from the other sectors, except life assurance have declined since 2008 with the Financial Services sector reducing by almost 50% from £10.2 billion to £6.1 billion.

There are 1.25 million companies with trading profits and of those, 892,000 companies pay CT in the UK and these earned chargeable profits of £185.5 billion. 34 pay CT of more than £100 million per annum and another 34 pay over £50 million in CT per annum. Banking, finance and insurance is the largest sector in terms of Corporation Tax followed by Business Services and Energy and Water Supply. Over 95% of all profitable UK companies paid tax at the 21% Small Companies rate or were granted marginal relief. 40,000 companies were charged CT at the main rate (28% or 26%).

While wider economic conditions influence profit levels CT liabilities are also influenced by other factors, such as rate changes, payment dates and changes in CT in other jurisdictions – all of which can lead to large multinational companies increasing or decreasing their level of operations.

Taxable profits for CT include income such as trading profits or investment profits; capital gains, known as chargeable gains for CT purposes. A system of capital allowances can give rise to a difference between the pre-tax profits published in annual accounts and taxable profits liable to CT. There are other reliefs, such as group reliefs which arise when companies are owned or own 75% of another company(ies) and some components of that group suffer trading losses.

Irish households - drop in loans and deposits

At the end of November Irish households had credit liabilities of €110.2 billion and deposits of €91.3 billion. There was a decline of 4.1% in loans since November 2010. Lending for house purchase was 2.5% lower while lending for consumption was 8% lower.

Some 78% of this credit (€80.3 billion) was in respect of loans for house purchase while consumer loans outstanding amounted to €16.6 billion and other undefined categories of loans to Irish households amounted to €13.2 billion.

There has been an overall reduction of €27.3 billion in credit advanced to households and almost all of this reduction is in the ‘loans for house purchase category. Some €15.4 billion of this credit was securitised. There are approximately 786,000 mortgages outstanding.

The total amount of deposits held by Irish households stood at €91.3 billion at the end of December 2011, a drop of €2.6 billion in the previous twelve months.

The currency in circulation in Ireland at the end of 2011 amounted to €12.4 billion, €755 million more than a year earlier. At the end of 2005 the value of the currency in circulation was €6.1 billion. The total money supply at the end of 2011 was €206.8 billion compared to €157 billion at the end of 2005.

The profile of the currency in circulation comprises 60,000 €500 notes; 25,000 €200 notes; two million €100 notes; 174 million €50 notes; 114 million €20 notes; €50 million €10 notes and approximately sixty million €5 notes. There are approximately 176 million coins with a value of around €14 million in circulation.

There are 2,137,000 credit cards in issue in Ireland which carried an outstanding credit balance of €2,78 billion. This is equivalent to an average amount due on each credit card of €1,305. Approximately 35% of the amount outstanding is paid by the end of the month so a significant portion of this debt is bearing very severe interest rates. There were 91,000 few credit cards in issue than at the end of 2010.

New spending on credit cards in December 2011, at €967 million, outstripped cumulative credit card payments by €45 million. During December 2010 new spending on credit cards outstripped payments that month by €24 million – so, while there are fewer credit cards now in issue there was a greater reliance on them to fund Christmas spending.

The outstanding level of borrowing from the Eurosystem by Irish resident credit providers was €108.4 billion at the end of December and €72 billion of this is owing by the domestic retail banks. This means that the Eurosystem is providing 72% of Ireland's private sector credit.

Mandating change in Europe

Fianna Fáil Leader, Micheál Martin TD argues that the people should be consulted in advance of significant changes in Europe that impact our nation. The German Government is proposing to treat Greece and any other fiscal miscreants like a back-office supervised by an EU Budget Commissioner.

There is an enormous and unsustainable democratic deficit in the relationship between Ireland and the European Union that must be recognised and promptly repaired so that the sovereign voice of the people is listened to and heeded.

This hiatus is evident beyond the agenda connected to the fiscal compact and the brinkmanship and doomsday options presented by ministers’ - were there to be a referendum to change the Constitution.

The Irish Merry-go-Round

Three of the nations twelve MEP’s elected in 2009 have now retired and been replaced by others automatically chosen from a Replacement List. A 25% churn is before the middle of a parliamentary term is significant change by any standard.

These replacements have neither presented a proposal to the electorate to introduce themselves nor do they have a mandate from the people. None of them even presented themselves as a candidate in the 2009 election, so from a European political perspective these replacements are total strangers.

This List from which they are chosen was presented by parties and independent candidates to the returning officer in each constituency before the election even took place – as if it were a matter of personal, confessional expediency over which the electorate over had as much influence as they had in choosing the cast of a pantomime. The consequences are that over 194,000 Irish voters have been disenfranchised while an insidious process of highly remunerated and abundantly expensed ‘jobs for insiders’ has thrived.

Gravy Train

The European Parliament is one well endowed gravy train with little, or no oversight of MEPs. Each of the 754 or them is paid a monthly pre-tax salary of €7,956.87 from the Parliament’s budget. This is subject to an EU tax and accident insurance contribution, after which the salary is €6,200.72. Member states can also subject the salary to national taxes. But, as is the case with Oireachtas politicians, no details are available on the Oireachtas web site of the tax liabilities of politicians.

MEPs are also granted an allowance of €4,299 each month – to cover the expenditure they incur in the performance of parliamentary duties. But when it was revealed that Irish senators were receiving an allowance of €23,000 per annum and Independent TD’s were receiving an allowance of €42,000 per annum, it was disclosed that some of this money was used for charity!

Apart from the allowance MEP’s get a mileage allowance of €0.50 per kilometre for a car journey plus fixed allowances based on the distance and duration of the journey. If they travel via other means to meetings of the European Parliament in Brussels or Strasbourg MEPs are refunded the actual cost of their travel based on receipts up to a maximum of a business class air fare or a first-class rail ticket.

MEPs often have to travel outside their home Member State for purposes other than official meetings (e.g. conferences). For this they receive reimbursement from a fixed yearly travel allowance of €4,243 for their travel, accommodation and out-of-pocket expenses. This is made on the presentation of supporting documentation.

The Parliament also pays MEPs a flat rate allowance of €304 for each day they attend official meetings of the Parliament bodies on which an MEP serves that are held within the European Community. This covers accommodation, meals and all other expenses involved in such attendance. The MEP must sign the attendance register to trigger payment. During plenary sessions this amount is reduced by 50% for MEPs who have not taken part in one half of the roll call votes held on the Tuesdays, Wednesdays. And Thursdays of part-sessions held in Strasbourg and on the second day of part-sessions held in Brussels.

Parliament pays a sum of €152 per day plus accommodation and breakfast expenses for attendance at meetings held outside the European Community – provided the MEP has signed the official attendance register for the meeting.

Filling Casual Vacancies

The procedure to fill the vacant seat mid-term of any retiring or deceased MEP is governed by national law. Irish law provides that it is not even necessary for a candidate, or a replacement, to even be a citizen of Ireland to represent an Irish constituency. Candidates are merely prohibited from standing for election in two Member Countries at the same time.

Why therefore, should the European Assembly Elections Act, 1984 not be amended so as to prescribe that when an MEP retires or dies in the course of the life of a Parliament his, or her, votes are examined by the chief returning officer and allocated to the next preference given by the voters to determine who the replacement is? Alternatively a by-election could be held as is the procedure in the independent-minded United Kingdom.

The Irish Government must demonstrate unambiguous leadership with the same agility as the capacity of an MEP to sign his, or her name, in giving concrete expression to the sovereignty of the people especially in the elevated strategic context of our relationship with the European Union.

Among the poor mouths, are some very high-earners in Ireland

Despite economic woes there are some very high income earners in Ireland. The latest figures refer to 2009 when 620 people declared an annual income of over €1 million and 261 paid tax of 30% , or less, on that income. Almost 2,500 declared an income of between a half million and one million euro and over 1,000 of them paid tax of 30%, or less.

The recession was gathering pace in Ireland in 2009. The number on the Live Register had increased from 290,018 in December 2008 to 413,505 (+42%!) in December 2009. The number of people employed dropped from 2,054,600 in December 2008 to 1,887,700 at the end of 2009, a drop of 8.1%.

All of this was reflected in lower national income tax receipts. Total gross income dropped from €78,152 million to €71,673 million, (-8.2%).

109,109 (4.3%) of Ireland’s 2.1 million income tax payers declared incomes in excess of €100,000 in 2009. Almost 10,000 (9,895 to be precise) declared incomes between €250,001 and €500,000; 2,495 persons declared incomes between €500,001 and €1 million and 620 declared an annual income in excess of €1 million.

Between them they pocketed an annal income of €19,791 million, 27% of the total gross income earned in the country that year.

They collectively paid income tax of €4,915 million, 46% of the total income tax collected.

The average effective tax rate for all Irish income tax payers in 2009 was 12.9% and the net tax due on their gross income that year was €10,616 million, a reduction in total income tax receipts of 13.2% from 2008. The average effective tax rate for the high-earners was 25%.

Under 50% of the high earners had an effective tax rate of 30%, or less, in 2009. This is calculated as the percentage of total tax liability to gross income. Those high earners in Ireland who make significant use of certain specified tax reliefs have had to deal with tighter restrictions since 2010 so that a 30% effective tax arte applies for those subject to the full restriction. Those reliefs do not include those for health expense and standard tax credits, which are available to all taxpayers.

The demographic profile of Ireland 2.1 million income tax payers in 2009 comprised – 30% single males; 28% single females; 20% married and both are working while 17% were married but only one person is working. There were 20,171 widowers and 57,186 widows.

Over 982,000 (46%) of all income tax payers had an annual income of €25,000, or less, in 2009.

Dublin accounts for 60% of smuggled cigarette seizures in Ireland

Customs officers seized over 715 million smuggled cigarettes in Ireland over the past five years. Seizures in Dublin accouted for 437 million of these followed by the Border-Midlands-West where Customs discovered over 184 million illicit cigarettes. The remainder of the country (East, except Dublin, South-East and South-West) was the source of 94 million smuggled cigarettes between 2006 and the end of 2011.

Customs also seized over 29½ tonnes of tobacco with a corresponding loss to the Exchequer of €10.28 million.

To put this combined loss in a context – the prospective yield this year from the newly introduced Household Charge is €180 million. The loss of revenue to the Irish Exchequer from tobacco and cigarette smuggling in two years, 2008 and 2009, is comparable to the prospective yield in 2012 from the newly introduced Household Charge (€180 million).

The detections and seizures of smuggled cigarettes and tobacco is achieved through a combination of risk analysis, profiling, intelligence as well as the screening of cargo, vehicles and postal packages. Intelligence checks and random checks are made of retail outlets, farmers markets and private and commercial premises. Seversal blitz operations were conducted which uncovered over 34 million cigarettes and over 1,700 kgs of tobacco.

The European Anti-Fraud Office (OLAF) is very active in tackling this menace at an international level and is an important source of intelligence gathering in combating illegal tobacco smuggling globally.

Spanish Customs launched Operation "BALMAN" in February 2010 when specific intelligence about suspicious imports of cigarettes from China was received by OLAF and the Customs Service of the Czech Republic. Fast and accurate exchanges of information between OLAF and national authorities allowed investigators to track containers of counterfeit cigarettes from China to ports on the east coast of Spain, where they were diverted onto the illegal market. OLAF's involvement contributed to the seizure of six containers with more than 40 million cigarettes in Spain and Portugal, preventing financial losses to the EU budget and Member States of more than € 6 million.

In June 2010 the joint customs operation "SIROCCO" focused on deep sea containers loaded in China or the United Arab Emirates and arriving in the Mediterranean area. The objective was to identify consignments suspected of containing counterfeit or smuggled genuine cigarettes, as well as other counterfeit and illegal goods. It is estimated that the seizure of cigarettes alone prevented a potential loss of approximately € 8 million in customs duties and taxes in the EU.

Around 40 million cigarettes, 1.2 tonnes of hand-rolled tobacco, as well as 7,000 litres of alcohol and 8 million other counterfeit items including clothing, shoes, toys and electronics, were seized during the joint customs operations. Three suspected cigarette traffickers were arrested. OLAF provided logistical and technical support throughout the operation. It coordinated the operation from a Permanent Operational Coordination Unit based in OLAF’s premises in Brussels. The unit was staffed by customs liaison officers from nine EU Member States (Belgium, Denmark, Germany, Italy, the Netherlands, Poland, Portugal, Spain and Romania), Egypt, Morocco and Turkey, as well as a liaison officer from Europol.

2011: A flat year for Údarás na Gaeltachta

Údaras na Gaeltachta, that economic development agency of the Gaeltacht with the 20-member board and 96 staff published its year-end review for 2011 this week. Headline milestones were that 734 jobs were ‘created’. Despite the incidence of ‘job creation’ the overall employment in their client companies stagnated at 104 fewer than the 7,074 that were employed at the end of 2010.

Last year was a difficult year because budgets were trimmed and the board of 20 expressed their ‘great disapproval’ when they realised this in December 2010. The capital budget was to be cut from €15 million to €6 million and a further €6.2 million was to be funded from the resources of An tÚdaras and that included a prospective €2 million to be generated from the sale of assets. It responded to this trauma by cutting its ‘job creation target’ from 600 to 300.

But, glory-be, by the end of 2011 guess what? 400 jobs were ‘approved’ in 2011 that they believe have an associated investment of €21 million. They ave not managed in the past decade to deliver more than 100 extra jobs. That was in 2008 when 8,193 were employed in their client companies.

The budget for 2012 was discussed in early December and is to be reduced by a further 4% compared to the 2011 budget. But the 20-member board, who pocketed over €2 million in fees and expenses since they were elected in 2006, conceded that despite the reduction they would construe the 2012 budget as ‘a vote of confidence in them’ in their enterprise functions.

A few weeks earlier the Minister in charge of them, Dinny McGinley, suggested that he could save €500,000 by deferring the election of a new board; that he would reduce the board to 12 members and explore the possibility of these being appointed by local councils.

As recently as 2008 they boasted that 65% of the Gaeltacht ‘some level of internet connectivity’, but that the quality of the service was deficient in some regions and there was no provision in others – this is the view of a agency that spent €315 million between 2006 and 2010.

It is interesting, for example, to see that Dell Computer is now operating a social media monitoring centre. This monitors more than 25,000 posts daily on Twitter that relate to Dell. The underlying philosophy is that a single customer complaint, from someone with influence, can have more reputational impact than other forms of marketing. Dell boasts a 99% resolution rate customer satisfaction. This approach to feedback and service recognises that in an age of smart internet-enabled consumers, being ‘customer focused’ is not enough. How is the Gaeltacht able to compete at that level?

An tÚdarás is very gung-ho about its role in the 20-Year Strategy for the Irish Language. This envisages that there will be 250,000 daily Irish speakers by 2030. Their contribution to this strategy in 2011 was to subsidise 70 preschools attended by 900 youngsters and 565 adults attended other Irish Language courses. This would mean that the Government target of 250,000 daily Irish speakers might be achieved in 170 years providing there is no duplication of attendees from year to year. But they want a 'central role' as an implementing agency of this Strategy and being the midwife of a 'new era of history'. That national role is also a 'vote of confidence in the organisation', according to themselves.

Rambling, shambolic Irish Red Cross stumbles on

Despite admitting to being in what was termed 'uncharted waters', on the groundsthat the Irish Red Cross Society does not fall under its direct remit, the Public Accounts Committee of Dáil Éreann was treated to a mind-numbing account this week of its unfinalised response to dealing with areas of governance, financial control and the management of its headquarters. This session followed a prior session with the Committee last October when the Vote of the Department of Defence was being examined.
It beggars belief that the State is continuing to provide close to €1 million in annual funding to the Irish Red Cross Society. This wretched organisation has been in existence for over 70 years and its primary function is to support the military and tend to prisoners-of-war, but it has never engaged in either function.

Instead, it is a generic charity that had no strategic relationship whatsoever to the nation that could not be adequately and more competently catered for by other charities and Civil Defence.

The sponsor of its State funding is the Department of Defence. The former Secretary-General of this Department from 1995 to 2003, David O’Callaghan told the Public Accounts Committee meeting on 19 January that for nearly ten years he 'had been racking his brain as to how many times the Red Cross appeared on his radar of top-ten issues' and 'could remember no time when we had difficulties with it’.

That is despite the fact that in December 1999 there was major public concern about the conduct of this Society. The Minister of Defence at the time, Michael Smith, told the Dáil that a new secretary-general had been recruited by the Red Cross earlier in 1999 and that ‘one of his first tasks … was a strategic review of the operation of the Society, encompassing the views of all organs of the Society to ‘ensure the strengthening and development of the Society' and that the review will be completed by mid-2000.

Twelve years later and O’Callaghan, as Chairman of the Red Cross, tells the Public Accounts Committee that the Red Cross ‘did not keep pace with standards of best practice in respect of governance and oversight’, but that ‘the Society has recognised that weakness and responded to it in a substantial and convincing manner’.

Their response includes an overhaul of the Constitution which would preclude members of the Executive Committee from serving more than two consecutive three-year terms. However, this will not mean that the current Vice Chairman of the Society, who was one of two cheque signatories of one of 49 undisclosed bank accounts, can continue in the role of Vice Chairman for a further six years. Putin could not devise a more self-serving response to governance.

The existence of the missing bank accounts was exposed in August 2008, but it took until November 2009 before the matter reached the agenda of the 12-member Executive Committee and the member representing the Department of Finance became aware of it, despite it meeting meets each month, except August. The Society's Head of Finance had attemtped to bury the matter as an 'administrative error' until the Fourth Estate made the public aware of the latest of shenanigans which trace their origin as far back as April 1991.

O’Callaghan’s successor as Secretary-General of the Department of Defence since 2004, Michael Howard was asked by the Public Accounts Committee if he had any recollection of a Government appointee to the Executive Committee of the Red Cross resigning in 2009 citing loose financial controls, impropriety or undisclosed bank accounts, but Howard said ‘it does not spring to mind’

It was also disclosed to the Public Accounts Committee that the Red Cross has a portfolio of 17 properties but the accounts it presents that incorporate the State subsidy only include Head Office property and income.

It was confirmed to the Committee that €136,000 was spent on legal fees in 2010 by the Red Cross prosecuting Google so as to identify a blogger who blew the whistle on the undisclosed bank account which contained public voluntary donations amouting to €160,000 and on 'how t manage information that was appearing on a blog'. The cover of the Head of Finance who was apparently trying to keep the undisclosed bank accounts that the Vice Chairman of the Red Cross was a signatory to was blown apart. The €140,000 spent on legal fees was from money collected from members of the public or recevied from the State.

During these controversies the Irish Red Cross retained an acting secretary-general on a consulting basis for a fee of €160,000 per annum, prior to acting on a consulting basis as Head of Finance. Professional fees charged to the Red Cross in 2010 were €211,000 and in 2009 were €288,000 while the Society ran a deficit of €12,000 and €64,000 in these years.

O’Callaghan in his opening contribution to the Public Accounts Committee defined his Society as ‘an independent charitable organisation’ and when Smith spoke in the Dáil in 1999 he stated that a fundament principle of Red Cross societies is that they enjoy freedom from political involvement worldwide. If the Government stopped the State subvention, removed the patronage of the President and its nominees to the Central Council the Red Cross would be free of political oversight and the resources of the Oireachtas could be deployed more prioductively.

Changing dynamics of Irish motor industry in a decade

The number of new private cars licensed in Ireland for the first time was totalled 160,908 having dropped from 225,269 the previous year. A decade later it dropped by a further 46% to 86,932 new cars licensed for the first time in 2011.

The changes were characterised by fairly dramatic changes:

Six marques disappeared altogether as being seperately listed - Alfa Romeo, Austin/Rover, Daewoo, Daihatsu, Izuzu and Saab - accounting for 8,553 units of the reduction.

There were three new arrivals, Cheverolet, Kia and Lexus which sold 3,418 units

Audi, Skoda and 'other makes' between them added 1,799 units in 2011 over what they sold in 2001.

Those marques that lost more than 46% include Citroen, Honda, Mitsubishi, Peugeot, Seat and Suzuki which collectively lost 25,054 units.

The marques which, relatively speaking, maintained popularity over the decade, insofar as the market decline was less than 46%, include BMW, Ford, Hyandai, Mazda, Mercedes-benz, Nissan, Opel, Renault, Suburu, Toyota, Volkswagen and Volvo but who, between them ropped volume 45,586 new cars.

Fancy selling Škoda in Ireland?

Last Friday, 20 January 2012, The Irish Times published an interview in its Business Section with the recently appointed managing director of Volkswagen Group Ireland which gave him a unique platform to introduce himself. But does he drive a Škoda?

At the back of the paper there was an avertisement in the Appointments Section where Škoda, the Volkswagen subsidiary, which bills itself as 'Simply Clever', announced it is looking for a Head of Sales and described how Škoda is a 'fast moving, dynamic brand with strong and exciting plans for growth'

The responsonsibilities include 'manage the dealer network to ensure that all sales KPI's are achieved'. The appointee is expected to have a 'passion for results and delivery of KPI's' (sic). He, or she will also deliver sales training programmes for 'Dealer Principles' (sic) and Sales Staff' and is expected to have 'a high level of written, verbal and presentation skills'.

Do these Škoda people not realise that is grammatically incorrect to write an acronym, such as KPI, in the possessive case? Are they also confusing principles with principals? What is to become of the reputation of Volkswagen if its subsidiary is shown to be not proficient in the use of English?

My perception of Škoda has never been inspiring, especially after a friend of mine purchased one and brought it to the vendor, a main Škoda dealer in Dublin, for its first service. My friend discovered afterwards that the oil had not been changed. But this astute customer knows his oils thoroughly, he having worked in the oil industry for a lifetime.

Another blackmark for Škoda in my book. Is this a case of a dealer without principles being supplied by a manufacturer who is not 'simply clever', but is 'simply incoherent'?

Last year there were 86,932 new private cars licensed in Ireland for the first time and Škoda accounted for 4,457 of these - fewer than Ford, Nissan, Opel, Renault, Toyota and Volkswagen. But so much for 'fast moving' - there were 210 fewer new Škoda cars licensed in 2011 compared to 2010.

Rampant cigarette smuggling forcing swingeing spending cuts on the Irish Government

The Irish Government intends to cut the Education Budget by €916 million between what it spent in 2010 and what it intends to spend in 2014. That sum is comparable to the exchequer revenue that will be lost as a result of cigarette smuggling even if Customs succeed in executing 50,000 seizures worth a further €1 billion in lost taxes.  Less than half of smuggled cigarettes are seized by the authorities according to anecdotal evidence and research.

Last year the Irish Government collected €4.6 billion in excise duties, of which over €1 billion was in respect of cigarettes. The tax component of cigarettes in Ireland is of the order of 80% of the retail price and the price of cigarettes in Ireland is among the highest in the European Union.

The ban on smoking in the workplace introduced in 2004 and the high price of cigarettes combined with rampant smuggling have been a deterrent on demand causing cigarette consumption of duty-paid cigarettes to drop by 41% since the smoking ban became law.

While total tax receipts from cigarette smokers have fallen by just 7%, the Irish Exchequer has lost an estimated €1.6 billion in exchequer receipts since 2004 as a consequence of cigarette smuggling, making this one of the most costly losses to the State. The European Union states are said to lose €10 billion per year as a consequence of the trade in illicit cigarettes.

Our customs authorities have undertaken more than 710 million cigarettes in more than 55,500 seizures in the past five years with an associated revenue loss to the State of over €290 million. But anecdotal and research evidence suggest that non duty-paid cigarettes is equivalent to 23% of total consumption.

Some of this is accounted for by the legitimate importation of cigarettes by bona fide international travellers and by immigrants from countries with a lower incidence of taxation on cigarettes.

The European Court of Justice banned Ireland, France and Austria from imposing State-controlled minimum prices.

The black market price of cigarettes in Ireland can be as low as 40% of the prevailing retail price.

But behind the 54,500 detections and seizures of illicit cigarettes in Ireland is an elaborate criminal complex that is heavily embedded in trafficking because the penalties are lower than is the case for involvement with other contraband and the profits large. The modus operandi ranges from ‘ant’ smuggling when small groups make frequent cross-border visits to large-scale container shipments and the 710 million cigarettes smuggled into Ireland in 2011 would have required seven fully laden 40-foot containers to transport them.

China, Russia and the Commonwealth of Independent States and some Baltic States are major source countries. Transhipment of large volumes before entry into the EU occurs in order to conceal the scale of activity with Middle East duty-free ports being a preferred venue.

Apart from Ireland, other sought after destinations in the EU are Germany, Spain and the UK.

There are various categories of smuggled cigarettes. Some are genuine but another category are known as ‘cheap whites’ – the term for cigarettes produced independently of normal manufacturers. Cheap white are typically cheap brands of reasonable and consistent quality, unlike counterfeits. The most popular ‘cheap white’ brand is Jin Ling, a brand that had not been heard of in 2005 but which is intended to mimic Camel cigarettes, which is manufactured in the Russian seaport enclave of Kalingrad, Ukraine and Moldova. This brand alone accounts for over 20% of the German illicit market. Five Russian illicit cigarette factories are said to have the capacity to make 24 billion sticks per year, equivalent to 7% of annual legal imports into the EU. This brand has no legal legitimacy in any part of Europe. It is distributed and sold exclusively through underground networks. The packs do not even feature the standard health warning on all normal packs.

The United Arab Emirates is another critical source of cheap whites from where they are shipped into Europe via Greece.

China is the largest source of counterfeit cigarettes of well known brands, such as Marlboro and this merchandise is typically shipped into Europe by sea.

There are also illegal cigarette factories in the EU, especially in Poland and some Baltic States with much of the output ending up in Germany. The tobacco is frequently sourced in Ukraine; while other factors are obtained in Lithuania and the manufacture takes place in Poland.

Last year a case was initiated in France that involved five countries: Hungary, Slovak, Czech, Germany and Italy against a large network operating from Ukraine to the United Kingdom. More than 150 personnel were deployed to support local police. This investigation uncovered the existence of a structured criminal organisation based in Ukraine which operated through front companies in several EU Member States. These companies established fictional commercial routes which concealed fraudulent activity using normal shippers. Transhipments were arranged in France through normal logistics companies. Illicit shipments were blended with legal cargoes of vegetables, fish, building supplies, peat moss, cardboard, paper etc. Key personnel were arrested in a coordinated and simultaneous police action on June 21^st 2011.

The financial loss arising from cigarette smuggling is borne by governments and taxpayers, not by producers or distributors who make their profit when the product is sold, not when it is taxed at the point of importation.

The response of Ireland’s Revenue Commissioners is to ‘target and confront those who do not comply’ with their obligations under tax and duty regulations. A key objective is to deter smugglers of tobacco products and to reduce the availability of contraband in Ireland. The overall approach includes:

• Educating the public on the negative aspects of contraband and media coverage of prosecutions. There were 14 convictions for customs offences in 2011.
• Ensuring that the legitimate trade remains compliant – excise duty collection; verification of sales figures; testing the legality of products sold
• Visible interventions – through more streamlined deployment of resources; the use of analytics, trend analysis of assessments.
• Improved collaboration with other State entities, including the Criminal Assets Bureau, Gardaí, shippers and others
• Prosecuting cases. There were over 200 formal Revenue criminal investigations in 2011

Philip Morris entered into an agreement with ten Member States of the European Union in 2004,that did not include Ireland, to fight cigarette smuggling and counterfeiting activity by making substantial payments to support additional measures and procedures. This also covered procedures to track and trace its cigarettes.

But smuggling is also sustained by other factors, including:

• The involvement of legitimate cigarette companies in smuggling activities. This has resulted in convictions in Hong Kong and Canada.
• The lack of more secure systems for transporting cigarettes giving smugglers access to large volumes of cigarettes free of all taxes and duties
• Price differentials. The highest prices in Europe are those charged in the UK and Ireland.
• Duty-free sales provides a venue for large volumes of cigarettes and smuggling opportunities
• Lack of resources to tobacco enforcement in most countries make it more difficult to eradicate smuggling
• Some countries tolerate smuggling more than others when enforcement is lax, penalties low, corruption widespread and smuggling is not deemed a serious crime.