Gov’t plans to start Fuel marking in early 2018

The government plans to implement fuel marking next year not only to help shore up revenues under the first tax reform package but also to combat smuggling.

Finance Undersecretary Karl Kendrick T. Chua told reporters yesterday that the Bureau of Customs would implement fuel marking early next year, especially as it has been included in House Bill No. 5636 containing the Department of Finance’s proposal to ease the tax burden on income earners while slapping new taxes on consumption.

Besides the mandatory use of fuel marking, HB 5636 included tax administration measures such as the mandatory issuance of e-receipts; mandatory interconnection of large and medium firms’ point-of-sale machines and accounting system with the Bureau of Internal Revenue’s; mandatory use of GPS locks when transporting cargo from ports to economic zones and free ports, and relaxation of bank secrecy for fraud cases.

“Our original position was it [fuel marking] doesn’t have to be in the law. If they want to put it into the law, it’s okay. But we’re doing it anyway, whether it’s in the law or not,” Chua said.

Bidding for the provider of fuel marking services will start soon, according to Chua.

He said fuel marking would also address smuggling, citing industry estimates of P30 billion in foregone revenues yearly from the illicit trade. “We intend to recover [an amount] something close to that.”

Chua said they expected the cost of fuel marking, which was about nine centavos a liter when piloted during the Arroyo administration, to be shouldered by oil firms.

“It’s a contribution they have to pay to ensure that they have the right fuel. If their fuel was smuggled and mixed with kerosene, vehicles would be damaged. So it’s like an insurance they have to pay for themselves to ensure that they will use the right and clean [fuel],” Chua explained.

Customs Commissioner Nicanor E. Faeldon earlier said that the BOC wanted to implement fuel marking in order to determine the actual volume of oil coming in and how much was smuggled.

Last February, the BOC said smuggling of oil and luxury vehicles were its “top sources of revenue leaks,” with foregone revenues reaching more than P50 billion annually or a tenth of the agency’s annual revenue target averaging P467.9 billion.

Faeldon had said that they planned to put markings on all oil products, whether imported or locally refined petroleum.

The Customs chief had said that fuel marking would cost only 6-8 centavos a liter and this would be shouldered by private firms.