House leader calls for stricter measures vs. fuel smuggling

MANILA – The chairman of the House Ways and Means Committee on Monday called for stricter customs enforcement on imported petroleum products, saying the government lost some PHP357 billion due to fuel smuggling alone from 2010 to 2019.

During the committee hearing on the use of customs bonded warehouses as smuggling conduits, Albay Rep. Joey Salceda said the value of potentially smuggled fuel from 2010 to 2017 was on the rise based on trade data from the United Nations Conference on Trade and Development.

Salceda, however, noted that the fuel marking program under the Tax Reform for Acceleration and Inclusion (TRAIN) law has helped lower the probable value lost to smuggling in 2018.

He said while smuggling has since been on a slow decline, the foregone revenues are increasing as TRAIN also imposed new excise taxes on fuel.

“We have lost PHP357 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.

He said fuel smuggling is easiest in freeport zones where fuel marking is only conducted at the gates, and where enforcement is less strict since freeports are outside customs territory.

Aside from that, he cited that customs bonded warehouses (CBWs) as a potential source of smuggling. CBWs are storage facilities 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 urged the Bureau of Customs (BOC) and the Department of Finance (DOF) to form a Task Force against fuel smuggling, colloquially known as ‘paihi.’

“If you want to know why some gasoline stations can offer prices PHP10 lower than the competition, look no further than fuel smuggling. It’s real and it happens just under our noses. The opportunity to catch smuggling is everywhere from the port to the gasoline station, so we can if we try,” Salceda said. “I am urging this task force to be created. Undertake programs and audits that will catch fuel smuggling.”

He noted that new policy proposals can also be introduced to close loopholes on fuel smuggling.

“We have to do better with enforcement. The working class has no choice but to pay taxes. But the rich receive both legal and illegal tax privileges. PHP357 billion lost taxes to fuel smuggling alone is unconscionable. That’s half of everything LGUs receive from the national government every year, and 4 years’ worth of 4Ps. Help me fight smuggling,” he said.