Oil smuggling seen up since TRAIN law took effect

The Federation of Philippine Industries claimed that the country’s revenue losses due to oil smuggling have increased by about 30 percent since higher excise taxes were slapped on the product.

FPI said the government should heighten efforts to combat smuggling, which continues to cost the country billions of pesos in foregone revenue driven mostly by leakages in the oil sector.

The group compared the estimated revenue loss before and after the first tax reform package got implemented starting January last year.

The Tax Reform for Acceleration and Inclusion (TRAIN) Act lowered the personal income tax while raising consumption taxes.

The law, which has contributed to last year’s inflation, has been tagged by critics as antipoor, especially since minimum wage earners will not benefit from lower personal income tax since they are exempted from the tax in the first place.

“Prior to TRAIN, we were losing an estimated P40 billion in revenue to oil smuggling,” said FPI chair Jesus Arranza.

“But with the implementation of additional excise taxes beginning 2018, we expect this number to have increased by about 30 percent. This is why antismuggling efforts should be enhanced and be more targeted especially at the import terminals,” he noted.

He said that the Department of Energy should pay closer attention to importers to check on possible misdeclaration and underdeclaration of oil products.

He also said the DOF, through the bureaus of Customs and of Internal Revenue, should closely monitor product sources to validate if the importers paid the right taxes.

The Duterte administration is hoping that oil smuggling would decline after the government signed the contract with the joint venture of SGS Philippines Inc. and Switzerland-based SICPA SA for the rollout of the fuel marking program beginning this year.

Fuel marking will cost P0.06884 a liter as proposed  in the contract price of SGS and SICPA, the lone bidder last year.

The fuel marking contract between the BOC and SGS-SICPA was signed on Oct. 29 last year by former Customs Chief Isidro S. Lapeña and three of the joint venture’s representatives: SICPA regional counsel Benedict Sapin, SGS Philippines managing director Ariel Miranda and SGS oil, gas and chemicals director Christa Filius.