Tobacco and Alcohol Smuggling (Hansard, 11 December 1992)

§ Mr. Hardy
To ask the Chancellor of the Exchequer what estimates he has received regarding the potential annual revenue loss from smuggling tobacco products and 813W alcoholic beverages from European Community member states where the prices of such products are lower, following the completion of the single market; and if he will make a statement.

§ Sir John Cope
The Financial Statement and Budget Report published on 10 March estimated a full year loss of £250 million from increased cross-border shopping in the single market. It is very difficult to estimate the likely scale of smuggling. We are alert to the risks, however, and Customs and Excise have allocated additional staff for inland controls, including intelligence-based targeting and enhanced checks at likely outlets for smuggled goods.

§ Mr. Hardy
To ask the Chancellor of the Exchequer what information he has obtained on the extent of cigarette smuggling into other European Community member states, with particular reference to Germany; what is the likely revenue impact in the United Kingdom following the completion of the single market; and if he will make a statement.

§ Sir John Cope
Smuggling of cigarettes takes place in several EC countries—for example, by land into northern Italy and by sea into western Spain. Since German reunification, smuggling has developed between Poland and Germany. The Tobacco Advisory Council has estimated that 10 per cent. of the German and Italian cigarette markets can be attributed to smuggling.
It is difficult to estimate the likely extent of cigarette smuggling into the United Kingdom in the single market. The 1992–93 Financial Statement and Budget Report published in March 1992 contained an estimate of £250 million for the revenue loss associated with the increased levels of legitimate cross-border shopping of all excise goods in the single market.

§ Mr. Hardy
To ask the Chancellor of the Exchequer what measures he will take to protect against revenue loss from the smuggling of tobacco products from lower-taxed European Community member states in the light of the changed role of the law enforcement agencies following the completion of the single market next year.

§ Sir John Cope
The Finance (No. 2) Act 1992 introduced new offences to meet the threat of increased smuggling of revenue goods following the completion of the single market. The offences carry penalties up to seven years' imprisonment. Customs and Excise are also implementing new control procedures to catch and deter commercial bootleggers, including:
the recruitment and training of 120 excise verification officers for intelligence-based targeting and enhanced checks at likely outlets for smuggled goods;

increasing the excise intelligence resources within the customs investigation division;

increased mutual assistance with other member states, including the appointment of liaison officers in Netherlands, Belgium and France; and opposing the renewal of "on" and "off- licences, where appropriate, as the result of revenue offences involving the licensee.