THE FINANCE DEPARTMENT has set aside P2 billion for the procurement of the material needed for the fuel marking program — which is intended to generate at least P25 billion in additional revenue.
Finance Secretary Carlos G. Dominguez III said that the program would be able to tightly monitor removals of petroleum products.
“By spending P2 billion… we will probably yield between P25 to P40 additional revenue on fuel,” Mr. Dominguez told reporters last week.
Customs Commissioner Isidro S. Lapeña meanwhile said that the revenue agencies have convened a technical working group to work on the procurement exercise, ahead of the implementation of the fuel marking program in 2018.
“It’s moving forward,” he said, noting that the group is working on the mechanics of the procurement exercise.
Asked whether a bid can be rolled out before year’s end, Mr. Lapeña said: “That’s what we want, the faster the better.”
The fuel marking scheme is part of the Tax Reform for Acceleration and Inclusion Act.
The measure involves the introduction of markers or dyes into fuel which has gone through certain stages of import and taxation. Absence of the marker is to be taken as prima facie evidence that no tax was paid.
The dyes cost some P.09 centavos per liter, which will eventually be passed on to consumers.
In 2015, a Government Brief by the Asian Development Bank estimated $750 million worth of foregone revenue due to smuggled fuel products in the Philippines for 2014.
In 2016, the government collected P52.56 billion from petroleum products. The Bureau of Internal Revenue raked in P13.22 billion from fuel excise taxes and P2.11 billion from value-added tax (VAT). The Customs bureau on the other hand collected P10.92 billion in fuel excise taxes and P26.30 billion in VAT from fuel in the same year.
The earlier implementation of the fuel marking system was mandated by Finance department Order 23-07, pursuant to Republic Act 9337, or the VAT Law of 2005. Among others, that law exempted from VAT the import of petroleum products to be used by transport firms engaged exclusively in international operations. Smugglers, however, were able to divert these products for sale to other sectors which are not VAT-exempt.
This time, the tax reform program mandates such a scheme, along with other administrative measures to boost tax collection efficiency. — Elijah Joseph C. Tubayan