“Taxing cooperatives would cause the slow death of micro social enterprises and anti-poverty initiatives, especially in the countryside. The government should encourage the growth of groups that help the poor to compete against purely capitalist businesses. We should not shackle them with additional financial burdens. Please spare the coops. If government wants to generate additional revenue, it should look elsewhere.”
COOP-NATCCO Rep. Anthony Bravo on made this strong plea against proposed measures to remove the tax exemptions of cooperatives, stressing that coops do not operate mainly for profit. Taxing coops, he pointed out, would diminish whatever benefits they generate from their activities.
House Bill No. 4774, or the Tax Reform for Acceleration and Inclusion Bill, recently filed in Congress, aims to take away the tax privileges granted to cooperatives by the Philippine Cooperative Code of 2008 or Republic Act No. 9520.
Under the coop law, cooperatives are exempted from payment of income tax, VAT, percentage tax, donor’s tax, documentary stamp tax and other impositions when dealing with its members. Regular taxes are imposed, however, when coops engage in business transactions with non-members and third-party entities.
“The proposed tax measures will remove the important distinction between economic activities made with members and non-members. Likewise, the Coop Code already mandates us to set aside 30% of our surplus in what’s called the capital and patronage fund. Now the government wants to take a substantial chunk as taxes of the 70% that’s left for distribution to our members. Ano pa matitira sa mga miyembro? Malamang nito mag-alisan na lang sila sa coop. Papatayin nila ang mga coop.(What would be left for the members? They would just leave the coop. They would be killing the coops.)”
Bravo explained that there were many types of cooperatives such as credit, consumer, agri and producers coops that exist for mutual assistance among members. These groups do not operate purely for profit, unlike ordinary businesses.
“Coops provide an opportunity to earn and help each other for the economically disadvantaged. Coops are society’s antidote to big business and capitalism. When you take away their already-limited fiscal privileges, what would you think will happen?” Bravo stressed.
“If coop members earn, they will be taxed separately for income. If they spend, they pay VAT and other consumer taxes. In short, coop members are already responsible taxpayers. Let’s just not target the source, the coops themselves. It’s like taxing again what’s already being taxed.”
The COOP-NATCCO congressman noted that there were close to 25,000 registered cooperatives nationwide, with a membership of approximately 14 million. Eighty percent of coops are micro and small social enterprises composed of Filipinos who band together because they do not have the capital and the infrastructure to strike it on their own.
“We will be snuffing out the economic dreams of millions of struggling Filipinos if we remove the existing tax protections granted to coops. Congress should be a vehicle for economic development, not the other way around.”