Study: Black market costs economy €1.5bn

A new study has found that the black market in Ireland is costing the economy €1.5bn every year.

According to figures released by Grant Thornton and Retail Ireland, a third of that is lost by retailers and intellectual property holders such as record companies.

Retailers warned the impact of black market is worse than previously thought with Irish businesses and exchequer losing out to organised crime.

They called for harsher penalties, a public awareness campaign and international co-operation to combat the trade of illegal fuel, tobacco, digital entertainment and pharmaceuticals.

Chairman of Retail Ireland, Frank Gleeson, outlines which industries are worst affected.

He said: "The biggest ones we found are the tobacco and the fuel laundering where most of the crime is taking place at the moment.

"Those figures are well in excess of €500m each, so almost a billion euro between the two categories of fuel laundering tobacco."

Tax specialists Grant Thornton and Retail Ireland jointly published the report entitled “Illicit trade in Ireland: Uncovering the cost to the Irish economy”.

Mr Gleeson said: “The financial impact of illicit trade identified in this report is even worse than suggested by our previous research.

“Whilst the Government has recognised the seriousness of the problem, there is a lot more that it could do to help Irish retailers who are suffering lost sales to illegal operators.

“Consumers also have a role to play in realising that buying cheaply-priced goods sold informally or door-to-door is not a victimless crime, but one that is damaging the Irish economy and putting legitimate distributors out of business.

The report calculated the estimated financial losses to the exchequer are equivalent to 12% of the total interest bill of the €8bn the Government expects to pay on Ireland’s national debt in 2013.

The figures include uncollected taxes of as much as €937m and €547m in losses to retailers and businesses such as record companies.

The figures include up to €466m lost from fuel laundering and €691m from counterfeit cigarettes.

Elsewhere illegal downloads of music, computer games and computer software are said to cost in the region of €269m, partly leading to financial difficulties and job losses at companies like HMV, Golden Discs and Game.

And it stated almost €60m is lost to the exchequer by consumers buying counterfeit drugs rather than bone fide exports from pharmaceutical companies based in Ireland.

Brendan Foster, at Grant Thornton, said illicit trade is costing the state hundreds of millions of euro at a time when every cent of tax revenue is vital to the recovery of the public finances.

“Legitimate businesses are finding it impossible to compete against fraudulent goods being sold by organised criminal gangs whose illegal actions must be stamped out to avoid further business closures and job losses,” he said.

Separately, figures released yesterday by Revenue customs officers detected and dismantled 11 illegal oil plants and seized more than one million litres of illegally laundered fuel.

Elsewhere it said 95.6m counterfeit cigarettes and 5,277kg of tobacco were seized last year, valued at €43.3m and €1.95m respectively.