DOF proposes P2-B budget for fuel marking

MANILA, Philippines — The Department of Finance (DOF) is proposing a budget of P2 billion in 2018 for the fuel marking program, a tax administration measure aimed to plug as much as P40 billion in tax leakages caused by oil smuggling.

In an interview, Finance Secretary Carlos Dominguez said the government may allocate about P2 billion in 2018 for the roll out of its fuel marking scheme next year.

“That’s about P2 billion,” Dominguez told reporters.

According to the finance chief, investment in the fuel marking system is expected to benefit the government exponentially, as it would help curb the smuggling of fuel into the country.

“By spending P2 billion, which is one month’s collection, we expect additional revenues from fuel taxes,” he said.

Finance Assistant Secretary Mark Joven said with the implementation of the fuel marking scheme, the government may be able to plug P25 billion to P40 billion in estimated forgone revenue caused by the illicit trade of fuel.

However, Joven said the proposed budget is not final yet as the total project cost has yet to be determined.

“Actually, the P2 billion, we’re not sure yet it it’s the whole thing because it depends on the project. We would still need to bid it out,” he said.

Joven also said the required funds for the program is not yet proposed in the 2018 national budget, and may be requested as supplemental budget for next year.

The assistant secretary said the government is also mulling if it should charge the cost of the marker dyes to fuel manufacturers.

“Right now, we are thinking of a system similar to (cigarette tax) stamps, where we charge the manufacturer P30 per pack (excise tax) plus P0.13 for the stamp. Here, we are working on a mechanism where the government will procure the fuel marker, and then we sell it to (players),” Joven said.

He said the fuel marker is estimated to cost around P0.90 per liter.

Meanwhile, Customs commissioner Isidro Lapeña said the government has created a technical working group to discuss the implementation of the fuel marking program.

“We want to realize immediately the mechanics on how to get the service provider on that. It could be bidded out, it can be build-operate-transfer, mechanics like that. The faster the better,” he said.

The implementation of a fuel marking system is among the provisions under the Tax Reform for Acceleration and Inclusion Act (TRAIN), which contains the first package of the DOF’s Comprehensive Tax Reform Program (CTRP).