DOF to implement fuel marking scheme early 2018

The Department of Finance (DOF) plans to implement the long-delayed fuel-marking scheme next year to curb rampant oil smuggling while raising government revenues.

Finance Undersecretary Karl Kendrick T. Chua said yesterday that the Customs bureau will implement the mandatory fuel markings with or without the legislation being initiated by lawmakers in the House of Representatives.

“Our original position is it doesn't have to be in the law. If they want to put it into the law, it's okay. But we are doing it anyway, whether it is in the law or not,” Chua told reporters. “It will be implemented early next year.”

Fuel marking is one of compensatory measures under the substitute tax-reform bill approved the House committee on ways and means.

Customs Commissioner Nicanor E. Faeldon earlier raised the need for the country’s fuel marking scheme, noting the absence of this system prevented the bureau to accurate account all oil importations.

The fuel-marking, which intends to monitor to correct payment of taxes, was first formally introduced during the Arroyo administration but was discontinued in the middle of former President Benigno S. Aquino III’s term.

Finance Secretary Carlos G. Dominguez III is supporting the Customs’ planned revival of fuel markings covering all petroleum products, whether locally refined or imported.

Chua said the bidding for the fuel-marking technology-provider should begin soon, noting the cost of the marking could be around P0.09 per liter.

“The proposal is, since it’s only nine centavos, it is easier if it is shouldered by the producers. It's a contribution they have to pay to ensure that they have the right fuel,” Chua said. During the later part of the Aquino administration, the DOF attempted but failed to reintroduce the fuel-marking system that should have covered locally refined and imported oil products. Based on an earlier estimate, the fuel-marking system would cost the government around $25 million, but the potential tax revenues that could generate may reach $300 million. During the Arroyo administration, the fuel marking system only covered the duty-free fuels. The government had tapped Swiss inspection services provider Societe Generale de Surveillance (SGS) for its fuel marking system. National Tax Research Center (NTRC) earlier said the fuel marking scheme has a “huge” benefit to the government as it will increase tax receipts — without raising taxes — and sales revenue from increased volumes of official fuel in legal circulation. The NTRC also added it will ensure that government bodies and regulators are able to collect the appropriate amount of revenue from excise tax on fuel. The fuel marking is not new in the Philippines. As early as 1983, chemical markers have been used to monitor petroleum products quality.