Philippine cooperatives are up in arms against proposed bills in Congress that aim to abolish their privilege of tax exemption.
In a meeting called by the Philippine Cooperative Center on Wednesday, leaders of cooperative federations from around the country agreed to campaign against provisions in the proposed law on the Rationalization of Fiscal Investment Incentives, now pending in the House of Representatives and in the Senate.
The cooperatives are particularly wary on the provision of the proposed law that seeks to repeal section 60 and 61 of the Cooperative Code of the Philippines (Republic Act 9520).
These provisions give cooperatives tax exemption privileges, among the non-taxable income of cooperatives are those derived from transactions with its members.
Also cooperatives with assets of not more than P10 million are exempt from “all national, city, municipal or barangay taxes. They are also exempt from customs duties, advance sales or compensation taxes on their importation of machineries, equipment and spare parts used by them.”
The repeal of the provisions, according to Ponciano Payoyo, chairperson of the Philippine Federation of Electric Cooperatives (Philfeco) is misplaced and defeats the role of cooperatives.
Payoyo said the proposed Fiscal Investment Incentives law should only be applied on investment promotions agencies, and that the Cooperative Development Authority (CDA) is not among those.
The creation of the CDA is mandated in section 15, Article XII of the Constitution, which says it is the policy of the state “to promote the viability and growth of cooperatives as instruments of equity, social justice and economic development.”
In a position paper submitted by the CDA to the House Committee on Ways and Means chaired by Rep. Romero Quimbo (Marikina, 2nd district), who deliberating the proposals, he said that repealing the tax exemption of cooperatives “will defeat the very intent of the 1987 Constitution.”
It added that “cooperatives are voluntary organizations of people who want to improve their economic lives by their own initiatives and using their own resources.”