Metro Manila (CNN Philippines, July 10) — The government’s fuel marking program should deter smuggling, which petroleum firms say has been on the rise since higher excise taxes took effect.
On Tuesday, Petron Corp. President and CEO Ramon Ang said he is seeing rampant smuggling in the country, which he attributed to the Tax Reform for Acceleration and Inclusion (TRAIN) law.
The law has so far added ₱4.50 per liter in the excise tax on petroleum products since taking effect Jan. 1, 2018. Another hike worth ₱1.50 per liter is scheduled next year, bringing the total increase to ₱6 per liter. According to Ang, this pushed pump prices by roughly ₱12 per liter.
Finance Secretary Carlos Dominguez III said they expected a spike in illicit fuel shipments and had a solution in mind.
“We anticipated the potential increase in smuggling and therefore initiated the fuel marking program under the TRAIN law. Fuel marking is designed to help address this issue,” Dominguez said when sought for comment.
Fuel marking means markers or dyes will be blended with petroleum products, which will be used to identify if the shipments went through legal import channels and paid the required taxes. Initially eyed to start in 2018, the program has been pushed back to the third quarter of this year. Once in place, this is expected to raise ₱5 billion in additional revenues yearly.
Ang said smaller gasoline stations are selling their products about ₱10 cheaper, which led him to think that their suppliers did not pay the right taxes.
Aside from stiffer competition, Ang said Petron, the country’s biggest oil refinery, is also reeling from big fluctuations in world crude prices — so much that he is shelving plans to expand their facility in Limay, Bataan.
Petron netted ₱1.3 billion in the first quarter, plunging from ₱5.8 billion a year ago due to higher taxes and rising oil prices. Ang said this trend could keep Petron’s bottom line at just between ₱8-9 billion this year, versus its ₱7.069 billion profit in 2018.
Dominguez, however, said that the fuel marking scheme is already having an immediate effect on the market.
“In fact, after the previous announcement that implementation of the Fuel Marking Program would start this quarter, we noted a steady increase in collections among the ports where petroleum products are regularly imported. This is a strong indicator of increased compliance,” Dominguez added. “Those who skirted required declarations and payment of taxes in the past are now following the law.”
The top economic manager said that tax collections at the Port of Limay exceeded its June revenue goal by ₱3.6 billion, while the ports of Subic and Cagayan de Oro also collected beyond their targets.
