Fuel marking seen yielding P20B in gov’t revenue

The fuel marking system to be implemented early next year as part of the first tax reform package will generate P20 billion in additional revenue for the government as it is seen substantially curbing oil smuggling, according to officials of the Department of Finance.

Commissioner Isidro S. Lapeña told reporters recently the DOF-attached Bureau of Customs had created a technical working group on fuel marking as a means to collect the correct taxes from oil companies.

“We want to realize that as soon as possible but we are still firming up its mechanics, especially how to get the service provider. It could be auctioned off, it could be build-operate-transfer, or it could just be the service of maintaining the markers and then the BOC would just collect from those discovered not paying the correct tariff,” Lapeña said.

“Right now, we are thinking of a system similar to the cigarette tax stamps, although stamps are physical while this is chemical. For stamps, it’s a pass-on charge we collect from manufacturers. Here, we are working on a mechanism wherein the government will procure the fuel market and sell to oil firms,” Finance Assistant Secretary Mark Dennis Joven said.

Joven said the DOF plans to request P2 billion under a supplemental budget allocation next year for the rollout of the fuel marking scheme.

“We have the money for it; right now, we have the funds,” Finance Secretary Carlos Dominguez III said.

Finance Undersecretary Antonette Tionko said the private sector would still have to shell out nine centavos per liter for fuel marking fee.

Joven said that under the Senate version of the proposed first tax reform package, fuel marking would generate additional revenue of P20 billion, although foregone revenue from oil smuggling amounts to P25 billion to P40 billion yearly.