Salceda: Unabated fuel smuggling cost gov’t P357-B in unrealized revenues

With government losing at least P357 billion to unabated fuel smuggling from 2010 to 2019, Albay Rep. Joey Sarte Salceda called for the creation of a so-called “Task Force Paihi” to address the problem.

(Cong. Joey Salceda’s office / FILE PHOTO)

Salceda, chairman of the House Committee on Ways and Means, said government should expect additional losses unless swift measures are put in place to address the illegal activities. .

Using 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 smuggling has since been on a slow decline, Salceda revealed that 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.

Salceda added that 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. 

Customs bonded warehouses have also been identified by Salceda as potential source of rampant smuggling of fuel.

Salceda explained that customs bonded warehouses 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,” Salceda added.

Meanwhile, Salceda directed the Bureau of Customs and the Department of Finance to form a Task Force “Paihi” against fuel smuggling,

“If you want to know why some gasoline stations can offer prices 10 pesos 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. 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 stated.