MANILA, Philippines — The government lost P357 billion from 2010 to 2019 due to fuel smuggling, according to the House tax chief, Albay Rep. Joey Salceda.
Salceda asked the Department of Finance to form “Task Force Paihi” to stop fuel smuggling in the country.
Citing data from the United Nations Conference on Trade and Development, the lawmaker said the value of potentially smuggled fuel from 2010 to 2017 was on the rise, before the fuel marking program under the Tax Reform for Acceleration and Inclusion (TRAIN) law helped lower the probable value lost to smuggling in 2018.
“If you want to know why some gasoline stations can offer prices P10 lower than the competition, look no further than fuel smuggling. It’s real and it happens just under our noses,” Salceda said during the briefing of the Bureau of Customs and Bureau of Internal Revenue with the House committee on ways and means.
Expand fuel marking
He said “the opportunity to catch smuggling is everywhere from the port to the gasoline station, so we can if we try.”
“I am urging this task force to be created. Undertake programs and audits that will catch fuel smuggling. Expand the fuel marking program. Help us with new policy proposals to close loopholes on fuel smuggling,” he said.
Salceda said fuel smuggling was easiest at free ports where fuel marking was only conducted at the gates and not upon entry. He added that enforcement in these areas is less strict as free ports are outside customs territory.
The lawmaker said customs bonded warehouses (CBWs) could be potential places of smuggling, citing that CBWs are storage where imported goods can be stored with duties payment being deferred.
“If you can capture the ecozone and the customs officers in the CBWs in ecozones, you can practically do whatever you wish with smuggled fuel. That’s trouble, and if our refiners die and we continue to insist on directly imported finished fuel, this problem will also continue to grow,” he said.
He said a potential policy fix was to prohibit the use of free port privileges for importers that do not supply ecozone locators.