Gov’t eyes P20-B revenue from fuel marking scheme

The government wants to generate as much as P20 billion in additional revenue per year through the implementation of a fuel marking system, according to the Department of Finance (DOF).

In an interview, Finance Assistant Secretary Mark Dennis Joven said the government intends to plug tax leakages due to oil smuggling and to increase its oil excise tax collections through the adoption of a fuel marking technology.

Joven said the government’s target would be to collect additional taxes equivalent to 10 times the project cost of the proposed system, which is P2 billion annually.

“We are targeting maybe 10 times the total project cost. Project cost per year should be around P2 billion. We need to get more than what we invested in the program, otherwise, it’s a waste of money,” Joven said.

According to Finance Secretary Carlos Dominguez, the rollout of a fuel marking scheme would help the government plug losses caused by the smuggling of fuel into the country, which the agency estimates to be around P25- to P40-billion per year.

“The estimate is between P25- and P40-billion that is leaking out, so we want to capture as much as possible. But since we don’t have any experience in that, we think that we will achieve the goal of at least covering the cost and the goal should be to make about P20 billion or P18 billion net roughly,” he said.

However, DOF officials said the implementation of the program may again face delays as the government is still studying the application and technology needed for the fuel markers.

Joven said the system may be in place by early next year, a delay from the previous target which was second half of 2018.

Finance Undersecretary Antonette Tionko said the terms of reference (TOR) for the procurement of the fuel marking technology is being finalized by the involved parties, including the Bureau of Customs and the Department of Energy.

She said government representatives are also conducting consultation with the private sector, and have made site visits to ensure that technical aspects of the TOR are properly in place.

Joven said the government wants to complete and post the TOR this March, and start the procurement process for the services of a company which could provide and operate the fuel marking system.

“It (will go) through the bidding process through the DBM (Department of Budget and Management),” he said.

The implementation of a fuel marking system is among the provisions under the Tax Reform for Acceleration and Inclusion Act.