A legislator representing the 14-million strong cooperative sector is leading the charge in efforts to convince Congress to retain the tax exemptions currently extended to the country’s close to 10,000 cooperatives.
COOP-NATCCO Rep. Anthony Bravo said that while the coop sector supports the administration’s tax reform efforts, it opposes any move to repeal the tax exemptions given to cooperatives mandated under Republic Act 9520, or the Philippine Cooperative Code of 2008.
“We agree with the need to rationalize the granting and administration of incentives to investments. We likewise acknowledge the urgency to create a tax system that is simpler, fairer and more efficient––one characterized by low rates and a broad base that, if implemented properly, will promote investment, job creation and poverty reduction,” said Bravo.
Bravo added, however, “that the cooperative sector cannot fathom how removing the tax exemptions for cooperatives contributes to this objective.”
The legislator said that cooperatives should retain their tax exemptions because they are non-profit “social enterprises” that provide services for its members.
“Cooperatives are not corporations that exist for profit; cooperatives are social enterprises that contribute and exist to serve their members, not to make a profit,” explained Bravo, who added that cooperatives, unlike private companies, “do not issue stock or pay dividends to outside stockholders.”
“Instead, earnings are returned to their members in the form of lower loan rates, higher interest on deposits, and lower fees.”
The solon stressed that as social enterprises, cooperatives provide social services for marginalized sectors, especially the poor and underprivileged who comprise its members.
“Such services,” Bravo said, “are delivered utilizing their own capital, for the following: the operation of small businesses of cooperative members, training for values and leadership, loans with low interest and minimal documentation for immediate financial needs, cheaper goods for everyday needs, insurance and medical care at affordable costs, and decent housing.”
Bravo also emphasized that cooperatives should not be taxed because they do not generate profits.
Bravo explained that the “profit” or “surplus” of cooperatives are actually “savings” generated out of the cooperative’s operations. The “surplus” generated is considered “savings” because the whole “surplus” is returned to the member-patrons in the form of interest on capital and patronage refund.
According to Bravo, cooperatives do not even have full discretion to use these surpluses. Republic Act 9520, requires cooperatives to set aside a portion of their net surpluses for the following: the Reserve Fund, the Cooperative Education and Training Fund, the Community Development Fund, and the Optional Fund.
“In the past, millions of Filipinos belonging to cooperatives nationwide could count on Congress to listen to their pleas and address their needs; and this representation humbly, sincerely and seriously pleads that Congress once again empathize with the lot of our less fortunate, hardworking and nationalist countrymen and women, and requests that you stand by us and support our efforts to retain the tax benefits that we in the cooperative sector believe we have rightfully earned.”