Published
By Chino S. Leyco
The Department of
Finance (DOF) expects the implementation of its anti-oil smuggling scheme
beginning early next year would at least capture half of the estimated tax
leaks due to illicit fuel trade.
Finance Assistant
Secretary Mark Dennis Y.C. Joven said the government may raise around P20
billion in additional revenues annually once the fuel marking system is imposed
on both oil imports and locally refined petroleum products.
“We are targeting
around 10 times the total project cost,” Joven told reporters when asked about
the fuel marking’s potential revenues. “The project cost per year should be
around R2 billion, we need to get more than what we invested in the program
otherwise it’s a waste of money.”
Finance Undersecretary
Antonette C. Tionko, meanwhile, said that discussions with various stakeholders
from the oil sector continue to come up with the “best” program to implement
the fuel marking system.
“The technical working
group is continuing its discussions with the various sectors on how best to
implement the fuel marking. In fact the group, which is studying it, is
actually right now doing site visits,” Tionko said.
The goal is the find
out when is the best point to inject the fuel marker for every petroleum
company, Tionko said, noting each oil firm in the Philippines has different set
up.
“There is a TOR [terms
of reference] but then it has to be as specific as possible at what point do we
put the marker because if we put it the costing will change. That’s a very
critical element,” Tionko said.
According to Finance
Secretary Carlos G. Dominguez III, illicit fuel trade is costing the government
around P25 billion to P40 billion in foregone revenues annually.
“The cost [of the
project] is not that much compared to the potential gain you need to get,”
Dominguez said.
“We want to capture as
mush as possible but since we don’t have any experience in that we think our
goal is to achieve at least the project cost… the goal should be to make about
P20 billion or P18 billion net roughly,” he added.
Finance Undersecretary
Karl Kendrick T. Chua earlier said the mandatory fuel marking system, which is
included in the first tax reform package, was expected to plug the annual
losses incurred from oil smuggling.
Chua explained the
system was designed to curb smuggling and misdeclaration of petroleum products
that was costing the government P26.9 billion to P43.8 billion in foregone
revenues each year.
Under package one of
comprehensive tax reform package (CTRP), the fuel marking plan would be
implemented beginning next year by the Bureau of Customs, with the assistance
of the Bureau of Internal Revenue.
The procurement process
will be done through competitive bidding, Chua said.
“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 as low as 9
centavos per liter based on past pilots,” Chua said.
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