Small oil players welcome probe on reports of smuggling activities

The group of independent oil players in the country said over the weekend that it welcomes the government’s move to conduct a thorough investigation of suspected oil smuggling activities.

The Independent Philippine Petroleum Companies Association (IPPCA) said the probe should involve all the players in the oil industry. "The government must not leave no stones unturned in the investigation. It should cover both the big players, the small importers and the guerilla operators." 

"Our members have been unfairly implicated in the absence of solid evidence against any one of them. It is to our best individual interest that a formal investigation is done. And it is to the best interest of the government so it can collect the correct taxes each company has to pay," said IPPCA president Ramon Villavicencio of Flying V.

The IPPCA official said since there were claims that millions of liters of oil are smuggled into the country daily, the investigators should look into the import papers against actual shipments brought in.

"It should not be hard for law enforcers to track down smugglers because the unloading, transporting and distribution of oil products are done in full public view. Importation passes through customs," Villavicencio said.

The IPPCA official noted the adverse impact of these illegal activities on their operations. "The total volume of alleged smuggled oil seems to be much more than the 10 percent total market share of the small players on any given day. Investigators should look elsewhere for the excess cargo if it is there and if ever this is true," he said.

Villavicencio added that the smuggling issue might sidetrack the on-going debate at the Senate on the expanded value-added tax (VAT) bill seeking to impose a 12-percent VAT on all petroleum products over and above import tariffs and excise taxes.

"The fear that while public attention is diverted to the investigation, the plan to impose a third layer of tax on oil products may suddenly get passed by Congress. The consuming public may just wake up one day and see that the prices of petroleum products are driven up by P2.30 or higher per liter due to the new tax," he said.

The IPPCA official also prodded Congress to look deeper into their group’s alternative proposal of adjusting excise taxes by 65 centavos per liter of diesel and P1.50 per liter of premium gas to raise the needed revenues without imposing the bulk of the tax burden on poor consumers.

Villavicencio pointed out that the House of Representatives’ acknowledged tax expert Rep. Joey Salceda and Bureau of Internal Revenue chief Guillermo Parayno have acknowledged the superior features and reliability of excise taxes on oil products as revenue generators, as compared to the fluctuating VAT take.