Fuel marking program raises more funds for government

Around 9.30 billion liters of fuel were marked by the government from September 2019 to July 2, 2020 under the Fuel Marking Program, according to Finance Secretary Carlos Dominguez III.

Fuel marking program raises more funds for government

Dominguez expects the program to shore up revenues needed by the government to implement measures to combat the devastating impact of the COVID-19 pandemic.

In a message to reporters covering the Finance beat, Dominguez said the pace of the program was unaffected by the onslaught of the pandemic.

“We continued with the Fuel Marking Program despite the contagion and will proceed as in the past,” Dominguez said.

Data showed that of the total volume of fuel marked, Petron Corp. accounted for the bulk or 2.250 billion liters for a 24.18-percent share. It was followed by Shell with 1.90 billion liters for a 20.41-percent share, and Unioil with 1.026 billion for 11.03 percent.

Others include Chevron, with 821.6 million liters; Seaoil, 778.63 million; Phoenix, 741.40 million; Insular Oil, 550.597 million; Total/Filoil, 266.702 million; Jetti, 262.132 million; PTT, 146.271 million; Marubeni, 118.01 million; Micro Dragon, 96.438 million; Filoil, 68.185 million; Warbucks, 59.607 million; SL Harbor, 51.059 million; Goldenshare, 49.586 million; High Glory Subic, 49.067 million; Era1, 41.193 million; SL Gas, 18.365 million; and Jadelink, 11.940 million liters.

Luzon accounted for about 75 percent of the fuel marked, followed by Mindanao with 20 percent and the Visayas with 5 percent.

For the period September 2019 to June 2020 alone, about 9.141 billion liters were marked with a value of P503.578 billion. Of this volume, the Bureau of Customs reported 6.101 billion liters with a value of P336.074 billion. The BIR had 3.040 billion liters marked valued at P167.503 billion.

Fuel marking is mandated under the Tax Reform for Acceleration and Inclusion Act as a measure against smuggling of petroleum products.

Fuel marking is done after the taxes are paid on refined and imported gasoline, diesel and kerosene. To date, all import terminals and refineries of various oil companies nationwide comply with the marking requirement of the program.

“Definitely, the fuel marking program, as part of our tax reform is having a positive effect on our revenues and therefore on our ability to withstand the ill effects of the contagion,” Dominguez said in an earlier statement.

However, Dominguez said the disruption in supply and demand caused by the contagion made it more difficult to estimate the impact of fuel marking on reducing oil smuggling.

Dominguez said last year that the implementation of the fuel marking program would help address the expected rise in fuel smuggling in the wake of the increase in fuel taxes under TRAIN law that took effect in January 2018.

He said the government anticipated the potential increase in smuggling and therefore initiated the fuel marking program which was designed to address the issue.

Dominguez said in February 2020 the government was expecting P20 billion in additional revenue from the fuel marking program.

“With the full implementation of this program, we expect smuggling and misdeclaration of petroleum products to be greatly reduced, if not totally eradicated, and revenue collections to dramatically increase,” Dominguez said during the anniversary of the Bureau of Customs.

“This program is projected to generate an additional P20 billion in revenues,” he said. The program was fully rolled out in February.

Estimates by the Finance Department show that fuel smuggling costs the government P20 billion to P40 billion in foregone revenues annually.

According to a report presented by the Department of Finance during a recent meeting of the Cabinet’s Economic Development Cluster, 20 mobile analyzers will be deployed across the country to facilitate the random field testing on stored and transported fuel and those sold in 11,464 gas stations nationwide.

Data showed that in 2016, lost revenues from excise taxes and value-added tax due to oil smuggling and misdeclaration reached P26.9 billion, more than half of the actual P52.6 billion collected by the Bureau of Customs and Bureau of Internal Revenue for that year.

The Asian Development Bank had a higher estimate of P37.5 billion in lost annual tax revenues because of oil smuggling.  A study commissioned by local oil industry players estimated that revenue losses to oil smuggling reached as high as P43.8 billion annually.

Topics: Carlos Dominguez III , Fuel Marking Program , COVID-19 pandemic
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