Gov’t waging ineffectual war against illegal fuel distribution

The Finance Ministry is trying to unravel a huge fuel distribution racket involving customs officials, tanker trucks, supply companies, captains, municipal authorities, hospitals and gasoline stations. The racket causes an estimated revenue loss for the government of more than 300 million euros anually, which looks like increasing as legislation and ministerial decisions paradoxically help the violators in many cases. The ministry’s inadequate infrastructure, which makes it unable to track the supply orders for ships, and the fact that even municipalities and hospitals place orders (probably unwittingly) with tax evaders create a fuzzy picture which legislation actually encourages. Deputy Finance Minister Apostolos Fotiadis’s latest decision is just such a piece of legislation: It allows an 8 percent divergence when stocks are measured, and does not stipulate any tax inspections in fuel storage areas. This means that the estimated 46 percent of gasoline station owners who evaded taxes or engaged in other violations in the first half of 2003, will not have to pay any income tax and, indeed, have been given an official blessing to continue their activities. Ministry officials reject such claims, arguing that the decision provides for customs inspections to be carried out; they forget, however, that customs violations automatically mean tax violations for which the perpetrators will not be held accountable. An official of the Gas Station Owners Association told Kathimerini that they are rather pleasantly surprised and fully satisfied with the 8 percent fluctuation allowance. The estimated incidence of violations in the distribution of fuel has been advancing rapidly in recent years; from 7.61 percent in 2000, it grew to 17.15 percent last year. The Finance Ministry has found irregularities almost throughout the fuel distribution system, with the exception of refineries. Tricks Fuel marketing companies, which are solely responsible for distribution from the moment fuel leaves the refinery, were found to evade taxation at a rate of 51 percent. Gas stations usually evade taxation by storing larger quantities than those stipulated by law. Re-sellers use unlicensed storage areas, illegally extend existing areas and usually distribute with unlicensed vehicles. As regards bunker fuel, despite the latest measures for marking and adding coloring agents in fuel destined for all vessels of more than 10 registered tons, tax evasion is thriving. Violations usually take the form of bogus supplies for the same vessel or supplies for bogus vessels. This is done with the nominal use of more than one small refueling vessel for one ship; given the inability of customs to inspect all, the cargo of the «extra» refueling vessels is rerouted elsewhere in the market. It is also common to deliver smaller quantities to the vessels supplied and the balance that is unregistered to the market. The Athens municipal authority was until recently supplied by an illegal distributor that had won a tender conducted according to all the proper formalities, but was caught red-handed by the Financial Crimes Squad (SDOE). The former mayor, Dimitris Avramopoulos, was notified and issued a new tender. Seasonal cheats Another critical source of lost public revenue is the extensive practice of selling heating diesel (which is subject to a special low tax in winter) for automotive diesel (carrying a much higher tax); the two diesels are only distinguished by different coloring agents. According to a report prepared by SDOE, sales of automotive diesel drop to such an extent as winter sets in that the illegal substitution is obvious. The monthly consumption of automotive diesel averages 220,000 metric tons. This drops to 150,000 in December, January and February. Suppliers have been found to buy large quantities of heating diesel during the winter months and sell it as automotive fuel at lower than official rates. Using data for the 1994-1997 period, the study says the consumption ratio of heating to automotive diesel is 3:1. The data also shows an upward trend in the use of heating diesel, although parameters such as consumption according to geographical region, weather conditions and rising living standards have to be taken into account. Tax evasion has also been found to take place through bogus fuel exports to other Balkan countries; the fuel cargo is somehow miraculously «transformed» into water somewhere on the way, or is adulterated with petroleum by-products.

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