In a statement, Finance Undersecretary Karl Kendrick Chua said the fuel marking scheme provided under House Bill 5636 is aimed at curbing the illicit trade of petroleum products, which costs the government an estimated P26.9 billion to P43.8 billion in losses every year. File

Fuel marking to plug up to P44 B in lost revenues from smuggling
Mary Grace Padin (The Philippine Star) - May 28, 2017 - 4:00pm

MANILA, Philippines -  The mandatory fuel marking and monitoring system proposed under the government’s tax reform program is expected to plug as much as P44 billion in lost revenues annually due to oil smuggling, the Department of Finance (DOF) said over the weekend.

In a statement, Finance Undersecretary Karl Kendrick Chua said the fuel marking scheme provided under House Bill 5636 is aimed at curbing the illicit trade of petroleum products, which costs the government an estimated P26.9 billion to P43.8 billion in losses every year.

According to DOF data, the estimated revenue loss (value-added tax and excise taxes) brought about by smuggled or misdeclared fuel in 2016 stood at P26.87 billion.

However, Chua said the Asian Development Bank pegged losses at a higher figure of P37.5 billion annually, while a study commissioned by the local oil industry estimated foregone revenues at P43.8 billion per year.

The DOF, citing data from the Institute for Development and Econometric Analysis (IDEA) also said smuggled gasoline accounted for an estimated average of 23 percent of gasoline consumption from 2000 to 2006, while smuggled diesel accounted for an average of six percent.

In 2016, revenue collections from petroleum products reached P52.56 billion, the DOF said.

Of this amount, the Bureau of Internal Revenue (BIR) collected P13.22 billion in excise taxes and P2.11 billion in VAT, while the Bureau of Customs (BOC) collected P10.92 billion in excise taxes and P26.30 billion in VAT.

Implementing a fuel marking system is among the provisions under HB 5636 or Tax Reform for Acceleration and Inclusion Act (TRAIN), which contains the first package of the DOF’s Comprehensive Tax Reform Program (CTRP).

The bill is now on its second reading in the House of Representatives, and is expected to hurdle the plenary before June 2.

According to Chua, the fuel marking plan may be implemented beginning next year by the BOC, with the assistance of the BIR.

He said the procurement process for the technology to be used for the system will begin in the coming months through competitive bidding.

The undersecretary said the awarding of the contract is expected by the third quarter so the successful bidder would have enough time to roll out the system by Jan. 1, 2018.

“The project cost for a five year implementation is expected to be fully recoverable as early as the first year of implementation as the unit cost of fuel marking is low, as low as nine centavos per liter based on past pilots,” Chua said.

Philstar
  • Latest
  • Trending
Latest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

SIGN IN
or sign in with