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Profit Is Not the Primary Purpose of Cooperatives – GERON

 

The cooperatives sector is at a crossroads and facing an issue that can have a significant impact on the future of the cooperative movement in the country, said Rep. Rico B. Geron (Party-list, AGAP).

The legislator was referring to the proposed Comprehensive Tax Reform Program, also known as Tax Reform for Acceleration and Inclusion (TRAIN), which calls among others, for the removal of VAT exemptions previously enjoyed by cooperatives.

The lawmaker explained there are two conflicting schools of thought on the issue: on one hand, the Department of Finance believes lifting of the VAT exemption of coops is necessary to plug tax leakages and improve revenue collection. There is also the view that coops should not rely on their viability from fiscal incentives but rather on sound fiscal management.

On the other hand, the congressman said cooperatives insist that the Constitution itself seeks to promote the growth and viability of cooperatives as instrument for social justice and economic development.

“The cooperatives’ position is that this constitutional mandate be attained through the grant of tax exemption privileges. They agree that profit is not the primary purpose of cooperatives and merely incidental to its mission to serve its members. In general, however, the cooperative movement has expressed support for the objectives of the Tax Reform Package of the Duterte administration,” he said.

Geron said they expect the proposed amendments to the TRAIN bill to strike a compromise between the need for the government to raise revenues and ensure the long-term viability particularly of small and medium-scale cooperatives.

“Kami sa cooperatives sector ay talagang pinaglalaban namin diyan is manatili kung ano man privilege meron tayo sa cooperative. Being the partner of the government for economic and social development, a cooperative being a social enterprise. Ang compromise naming sinasabi ay that we are very supportive of the bill, lahat ng mga provision dun, bagama’t some of those ay maaaring tingin namin ay maganda pang i-enhance o i-improve like the Excise Tax, pero particular kami doon sa provision that would repeal the tax exemption privilege of the cooperatives. The compromise is that kung aalisin yung provision to repeal the tax exemption of the cooperatives then the cooperative sector will be very supportive of this,” he added.

Aside from the VAT exemption issue, he said the committee is currently working on some 20 bills under its jurisdiction. Last May 10, he said the committee adopted House Resolution No. 256, which seeks to close an avenue for corruption in regard to the issuance of Certificate of Tax Exemption by the Bureau of Internal Revenue.

Moreover, among the most significant proposals pending before the committee are House Bills 565, 1275 and 2571 seeking to reorganize the Cooperatives Development Authority; bills to create a mandatory position of cooperative officer in every government unit; and House Bills 188, 259, 2285 and 2824 seeking to ensure the growth and viability of cooperatives.

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