Task Force ‘Paihi’ proposed to curb fuel smuggling


    THE chair of the House committee on ways and means yesterday urged the Bureau of Customs and the Department of Finance (DOF) to form a task force to stop fuel smuggling after the government lost some P357 billion from 2010 to 2019.

    Albay Rep. Joey Salceda underscored the need for stricter customs enforcement on imported petroleum products during the regular Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR) briefing with his panel which is looking into the use of customs bonded warehouses as smuggling conduits.

    Citing trade data from the United Nations Conference on Trade and Development, Salceda 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 probably value lost to smuggling in 2018.

    While fuel smuggling, or “paihi,” has since been on a slow decline, Salceda said the foregone revenues are increasing as TRAIN also imposed new excise taxes on fuel.

    “We have lost P357 billion in foregone revenues due to fuel smuggling from 2010 to 2019.

    While fuel marking has helped lower smuggling, the bleeding on the revenue side is still growing because we raised taxes on fuel products in 2018,” Salceda said.

    The veteran economist-lawmaker said smuggling is the reason why some gasoline stations can offer prices that are lower by as much as P10 per liter than the prices of their competitors.

    “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. If necessary, we are willing to expand the budget for surveillance and investigation,” Salceda said.

    Salceda said a potential policy fix is to prohibit the use of freeports privileges for importers that do not supply to ecozone locators on top of other laws to close the loopholes on smugglers.

    “If you’re not supplying to an ecozone locator, why should you be exempt from fuel marking? Why should you even be in a freeport, unless you want to skirt certain regulations?” he said.

    Salceda said fuel smuggling is easiest in freeport zones where fuel marking is only conducted at the gates and not upon entry at the freeport and where enforcement is less strict as freeports are outside customs territory.

    He cited customs bonded warehouses where imported goods can be stored with duties payment being deferred are potential sources of smuggling.

    For its part, the BIR reported to the panel that its 2020 tax collection was lower by 10 percent from the previous year’s collection because of the COVID-19 pandemic.

    BIR Deputy Commissioner Arnel Guballa told the panel that while the agency collected a total of P1.956 trillion, which is 16 percent higher than its P1.685 trillion target for last year, the amount is lower by 10.5 percent or P230.14 billion compared to the P2.186 trillion the BIR collected in 2019.

    Based on 2020 BIR data, the agency collected P1.045 trillion income tax, P351.44 billion value-added tax (VAT), P296.08 billion excise tax, P117.16 billion percentage tax, and P145.73 billion from other taxes.

    In 2019, the BIR collected P1.155 trillion Income tax, P406.08 billion VAT, P317.27 billion Excise tax, P118.70 billion Percentage tax and P143.43 billion from other taxes.