By Jefferson Antiporda and Sheila Manalac/Manila

Oil smuggling syndicates appear to flourish under the administration of President Benigno Aquino 3rd, and government is losing billions of pesos in unpaid taxes, according to Senate President pro-tempore Ralph Recto.
Recto, in a statement released on Wednesday, said reforms at the Bureau of Customs should focus on oil smuggling, where the government loses P30bn to P40bn in potential revenues annually.
Losses from smuggled diesel and gasoline, he said, could be more than the annual subsidy the national government gives to the 120 state colleges and universities in the country.
Recto said that between 2010 and 2011, there is a huge gap in the taxes paid by 21 taxpayers in the petroleum sector, mostly oil companies. By his own estimates, Recto noted a steep drop of 37%, equivalent to P219bn, in the total tax payments by the oil sector.
Worse, he said, the number of vehicles using the country’s streets during the two-year period increased by 12% from 1,128,369 new cars and motorcycles in 2010 to 1,277,895 in 2011.
Interestingly, according to Recto’s figures, the total tax take from the 21 oil taxpayers was pegged at P593bn in 2010 when there were fewer new vehicles on the road. In 2011, the tax payments fell to only P374bn when there were actually more new vehicles added into the mainstream.
“There is no singular magic pill that will cure the many ills plaguing the Bureau of Customs,” Recto said. “What it needs is a cocktail of solutions ranging from overhauling the organisation, to overhauling rules on assessment and procedures, and even overhauling laws.”
Based on industry estimates, smuggled oil products accounted for about 30% of the total volume of the so-called white products like diesel and gasoline that are sold in the local market.
Most oil smuggling incidents were reported in the country’s economic zones and large ports, the entry points for imported petroleum products.
In February this year, The Manila Times reported that transportation undersecretary and former armed dorces chief Eduardo Oban has links with suspected oil smuggling syndicates. The report was denied by Malacanang and the Department of Transportation and Communication.
Recto’s name had been dragged into the latest mess at Customs involving the existence of padrinos and “powerful forces” in the bureau.
Rector admitted calling an official of the bureau but insisted he only wanted to inquire about a complaint from a businessman that he was harassed by Customs personnel.
He said the businessman wanted to pay the proper taxes for his shipment instead of giving “grease money”.
It was resigned Customs deputy commissioner for intelligence Danilo Lim who earlier said there are “powerful forces” who intervene in the affairs of the bureau, making their jobs more difficult.
Lim admitted granting favours to high officials who have been calling him to avoid getting their ire.
Last week, the Times identified executive secretary Paquito Ochoa Jr and speaker Feliciano Belmonte Jr as among the padrinos of some officials of the agency, quoting an unimpeachable source inside the bureau.
On Wednesday, Customs Commissioner Rozzano Rufino Ruffy Biazon admitted that “deep-rooted” problems within the bureau’s system continue to affect its employees and officials to efficiently perform and hit collection targets.
In an interview, Biazon revealed that “it is not enough to reshuffle officials within the bureau.”
“We are not addressing the root of the problem in the bureau, we want to implement reforms that is long lasting that lives past the Aquino administration, but the problem within the system persists,” Biazon said.
On July 26, Biazon ordered all district and subport collectors to resign as part of the “major revamp” within the bureau in an effort to “put the right people at the right place” and determine those who support the commissioner’s efforts for a wide-range reform.
With the deadline over, Biazon revealed that he will meet all the collectors today to “set the record straight and to determine which positions fit each and every one of the collectors.”
He also said that today’s meeting will be his basis for recommending which positions will go to what collector.
He will submit his recommendation to the Department of Finance for approval.
Biazon has been calling for modernization of Customs transactions, which he feels is a “fundamental reform measure” to beat the padrino system.
Senato Francis Chiz Escudero suggested installing security cameras in different Customs offices to monitor payoffs and malpractices.
“That’s good, but give us the money,” Biazon said.
He said corrupt officials can always hide from prying eyes by going out of the bureau premises.
Another lawmaker also suggested increasing the pay of Customs officials, something that delighted the commissioner.
“I’m glad that someone suggested that. Reform is not just punishment, reform is also about rewards,” he said.
Catching big smugglers “is the role that the bureau’s intelligence play. We are detecting these people and we are intensifying our efforts to catch them,” Biazon said.
The biggest problem for Biazon is that the Tariff and Customs Code is outdated and should be amended.
“The procedures and guidelines within the code are being used by these smugglers, importers and brokers to get away from what they are doing. They have already found a way to work within the system and they are using the same system to bribe some officials,” he said.