A fuel marking and monitoring system mandated under proposed tax reforms is expected to be in place by the second half of 2018, the Finance department said.
Finance Secretary Carlos Dominguez 3rd said the government would have to decide what kind of fuel marking service to implement given the variety of offers received from private providers and the kind of training that customs and tax personnel would have to undergo.
Dominguez said he also agreed that the service and supply of equipment for the fuel marking system would have to undergo approval of the interagency Investment Coordination Committee (ICC) as suggested by the Budget department.
“I said let’s just put it through ICC. We will have a meeting on the 6th [of December]anyway, so whether or not it is needed we will just put it before them. Anyway there is no controversy over that,” he told reporters in an interview.
Undersecretary Antonette Tionko said the Terms of Reference (TOR) for the system were almost complete and would be available by the end of the month, with the procurement process expected to start by December.
“The procurement process [is likely to be]finished by the first quarter, and we want to implement already by the second half,” she said.
Dominguez said the government would be “basically outsourcing” the service because it did not have the technical expertise.
The implementation of a fuel marking and monitoring system is included in the Tax Reform for Acceleration and Inclusion Act currently pending in the Congress.
Revenue losses from smuggled or misdeclared fuel hit P26.87 billion or about $565.68 million in 2016 alone, the Finance department said.
The Asian Development Bank has pegged the annual loss at a higher P37.5 billion while a study commissioned by the local oil industry estimated an even larger yearly loss of P43.8 billion.
The Institute for Development and Econometric Analysis estimated that “smuggled gasoline accounts for an average of 23 percent of gasoline consumption from 2000 to 2006,” while “smuggled diesel accounts for an average of 6 percent.”