Rampant smuggling means lost revenues

The credibility of the Philippine administration’s tax collection effort will again be severely tested by the seriousness of their efforts to stop the scandalous rampant smuggling of petroleum products. Smuggled oil products are said to now account for about 20% of petroleum products being sold in the local market. Diesel fuel and dual-purpose kerosene account for most of these. It is estimated that Php10 billion (US$220 million) in tax revenues for every 10% of total consumption sold illegally each year are being foregone by the government. While the economy has been growing 5 to 6% per annum for the last three years, reported crude oil and petroleum product imports have been declining on an average of about 7% per year from 2005 to date. For dual-purpose kerosene, the shipment may be declared as kerosene but actually sold as Jet A1, which is taxed at a higher rate. (August 22, 2007)