Fi­nance de­part­ment al­lo­cates P2 bil­lion for fuel mark­ing pro­cure­ment

Business World - - THE ECONOMY - Tubayan Elijah Joseph C.

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. —

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