1. Non Irish Duty Paid (NIDP) Cigarettes

2. How is it getting here?

3. Road Air (ANT smuggling) Sea

4. How is it being sold?

5. Purchases from Street Market - Clara Street Notices More recent reports of sales:  Door-to-door  Bingo halls  Supermarket car parks  Legitimate retail outlets

6. How big is the problem?

7. Industry Pack Collections – NIDP% Proportion of Non-Irish Duty Paid (NIDP) as measured by industry pack collections

8. NIDP Seizures Volume is rising dramatically, the number of seizures in 2008 is down on 2007. Distribution channels are becoming more established.

9. Latest development: Benson & Hedges bought in Balbriggan Market on Sunday, 28 June 2009 First time: Dual language health warnings New Irish tax stamp

10. Counterfeit Benson & Hedges Chronology of events 28 June: JTI test purchase in Balbriggan Market – 1 st discovery 29 June: Spanish Customs seize Irish truck with counterfeit B&H 30 June: Wicklow retailer selling counterfeit B&H (consumer complaint) 1 July: Display Ban introduced. 2 July: French Customs seize Irish truck with counterfeit B&H 3 July: Longford retailer selling counterfeit B&H (consumer complaint) 7 July: Kildare retailer approached with offer for regular supply of cheap B&H 8 July: Laois retailer approached with offer for regular supply of cheap B&H 14 July: Kilkenny retailer selling counterfeit B&H (C&E test purchase) 14 July: Waterford retailer selling counterfeit B&H (C&E test purchase) 22 July: Cork retailer approached with offer for regular supply of cheap B&H 22 July: Longford retailer selling counterfeit B&H (JTI test purchase) 28 July: Westmeath retailer selling counterfeit B&H (consumer complaint) 29 July: UK Customs seize freight vehicle in Belfast with counterfeit B&H

11. Why Ireland?

12. Price Gap €2.27 €5.35 Price Gap has more than doubled over the past 10 years Excise increases drive price differentials and growing issue of illicit trade €3.65

13. Retail Price Differentials Premium RRP/20 Sticks, June 2009 Lux. €3.00 Neighbours Ireland €8.45 U.K. €6.78 Portugal €3.45 France €5.30 Belgium €4.74 Netherlands €4.74 Austria €4.00 Italy €4.40 Denmark €4.35 Sweden €4.71 Finland €4.40 Albania €1.49 Croatia €2.71 Slovenia €2.80 Hungary €2.63 Slovakia €2.95 Czech. €2.98 Lithuania €2.06 Latvia €2.49 Estonia €2.55 Switzerland €4.37 Norway €8.60 Belarus €0.92 Ukraine €0.74 Romania €0.89 Bulgaria €2.00 Serbia €1.17 Turkey €2.30 Poland €2.09 Russia €0.94 Germany €4.94 Spain €3.10 Existing EU Greece €3.20 €2.20 North Cyprus €2.44 Madeira €2.65 Andorra €2.00 Lux. €4.00 Retail Price Differentials Cyprus €3.85

14. The Cost and Consequences

15. Tobacco Excise Source: Revenue Commissioner’s Annual Report Net Receipts 2008 € Millions 2007 € Millions 2006 € Millions 2005 € Millions Hydrocarbons2,1702,2042,1432,048 Motor Vehicles1,1211,4061,2871,149 Alcoholic Drinks1,0701,1311,0781,038 Tobacco1,1711,1921,1031,080 Others68708476 Total Excise5,6006,0035,6955,391 Tobacco as % of total excise 20.9119.8619.3720.03

16. NIDP – The Cost Volume2008 Bn 2009 Bn 2010 Bn Consumed6.56.0 Invoiced5.14.74.5 Illicit1.3 1.5 Illicit%20%22%25% Financials2008 €’m 2009 €’m 2010 €’m Excise & VAT387443526 Retail Sales Turnover487551658 Loss to Manufacturer656678 Cross Purchases Lost358 413

17. NIDP – Consequences Funds further national and international criminal activities. Diminishes the impact of Department of Health’s tobacco control measures on age, price and labeling. Efforts of small businesses to stay in business, provide employment and basic retail services to the local community are being undermined. Unacceptable loss of Government revenue especially during recessionary times. ------- Note: Display Ban effective from 1 July 2009 will diminish for the consumer the difference between legal cigarettes bought from “under the counter” and smuggled cigarettes bought in a street market.

18. What needs to be done?

19. We need policy/decisions makers to: Increase penalties for smuggling and illegal selling to ensure they act as a true deterrent New criminal offences should be created (for buyers and sellers) Enforce actual limits on quantities of cigarettes legally allowed into country rather than indicative level Expand enforcement powers in respect of street level activity under legislation such as the Casual Trading Act 1995. As much as possible, avoid aggravating the problem through excessive excise increases. ------ Source: ITMAC Law Reform Submission – Reform and Enforcement of the laws concerning the Unregulated Sale of Tobacco Products

20. Non-Industry Position Michael O’ Shea, CEO, Irish Heart Foundation – Press Release 16 June 2009 “The fight against smuggling of illegal cigarettes into Ireland is greatly under–resourced and the criminal fraternity see Ireland as a soft touch” John McCormack CEO Irish Cancer Society – Press Release 27 March 2009 “and now we know that the illegal smuggling of cigarettes is growing out of control in Ireland with children being used by smugglers to sell contraband and counterfeit cigarettes on the streets and in open markets” Irish Times 27 March 2009 “He said (Finance Minister Brian Lenihan) there are ongoing demands for the rate of excise on cigarettes to be increased by significantly more but it had to be looked at in the context of the Law of Diminishing Returns” Irish Examiner 19 March 2009 “Director of Public Prosecutions James Hamilton said he was shocked at the scale of the Black Market Tobacco Trade which was costing the public purse €500m every year”