The 14-million-strong cooperative sector gathered in separate locations nationwide in a series of Regional Show of Force beginning on April 29, 2017, culminating on May 4 in the National Capital Region (Metro Manila).

“It is an expression of solidarity to the poor who will be affected by the possible repeal of the tax exemption of the Cooperatives,” said the Philippine Cooperative Center in a statement.

The cooperators are protesting the repeal clauses in House Bill 4774 or the Tax Reform for Acceleration and Inclusion Bill (TRAIN Bill) authored by the Department of Finance, and filed in Congress by Quirino Representative Dakila Cua.

Cua is also Chairperson of the House Ways & Means Committee, which is Vice-Chaired by Albay Representative Joey Salceda.

The PCC coordinated with Regional Cooperative Development Councils to conduct the Simultaneous Show of Force nationwide starting April 29.

According to the arrangements, various Regional Coordinating Committees would converge at pre-determined venues, invite their respective District Congressmen and the media.

The Philippine Cooperative Center, composed of 54 national and regional federations and unions, and big primary cooperatives, recognized as the apex organization of Philippine cooperatives, in coordination with various Regional Coordinating Committee and the various Regional Cooperative Development Councils (RCDCs), organized this Series of Show of Force, calling on all cooperative leaders, members and staff and management to participate in the activity.

In a Position Paper drafted by a technical working group and culled from position papers submitted by co-op leaders from all over the country, the PCC said: “WE ARE ONE IN EXPRESSING STRONG AND UNYIELDING OPPOSITION TO THE REPEAL OF SECTIONS 60 AND 61 OF REPUBLIC ACT 9520.  We demand for the deletion of all provisions in the bills listed above repealing Articles 60 and 61 of RA 9520, otherwise known as the Philippine Cooperative Code of 2008.”

The Bills the PCC refers to are House Bill No. 231 by Rep. Eric Singson (Ilocos Sur), Senate Bill No. 229 by Sen. Franklin Drilon, House Bill Nos. 4688 by Rep. Joey Salceda (Albay) & HB 4774 drafted by the Dept. of Finance and filed by Quirino Representative Dakila Cua.

HB 4774, or the TRAIN Bill, promises “a tax system that is simpler, fairer, and more efficient, characterized by low rates and a broad base that promotes investment, job creation and poverty reduction.”

To compensate for the foregone taxes, HB 4774 will remove 87 tax exemptions – including those on co-ops, low cost and socialized housing, lease of residential units, power transmission, domestic shipping importation, etc.  Senior Citizens and PWDs were initially included but have been taken off the list.

Earlier, the PCC disseminated to cooperatives a draft Board Resolution for co-op boards to adopt, opposing the repeal of tax exemptions.  In the Resolution, co-op leaders are urged to dialogue with their District Congressman.  According to the representatives of the co-op bloc in Congress composed of AGAP Rep. Rico Geron and COOP-NATCCO Reps. Anthony Bravo and Ben Canama, the Party-list Bloc in Congress are sympathetic with the co-ops, although the District Representatives also have to be won over.

“The debate is now in the Committee on Ways & Means Chaired by Quirino Rep. Dakila Cua and Vice-Chaired by Albay Rep. Joey Salceda,” they said.

The PCC has, likewise, disseminated the list of House Ways & Means Committee members to the primary cooperatives for their leaders to approach, submit their Position Papers, and convince them not to include the co-op tax exemptions in the Repeal Clause of HB 4774.

Statistics from the Cooperative Development Authority (CDA) based on the Annual Reports of Cooperatives in their 2015 Operations, indicates that a Total Paid-Up Share Capital of Php67,787,458,588.08 is pooled together by 7,369,325 Individual Cooperative Members from 9,826 Cooperatives in order to share this resource to one another to improve their lives. This translates only to P9,198 individual share holdings.

PCC Chairman Hamilcar Rutaquio, who led a delegation of co-op leaders in a meeting with DOF officials on April 17, asked: “Ita-tax pa ba naman yang liit na halaga?” (Are you still going to tax that small amount?)

But based on the CDA figures, Dept. of Finance Undersecretary Karl Kendrick Chua said: “We need your help.  Because by exempting co-ops from VAT – and 100 other interest groups – we are throwing away P1.4 Trillion worth of VAT collection.”

He added: “We need to look at the big picture.  The 6 to 10 billion that can be collected from co-ops puwede ibalik lahat (can all be returned) in the form of services needed by the co-ops.  I cannot believe that tax exemption alone is the reason that you survive.”

Albay Rep. Joey Salceda, in the May 1 issue of the Business Mirror, was reported as saying: “Cooperatives opposing the (tax exemption repeal) should instead dwell on sound fiscal management rather than on continued tax incentives to ensure the success of their cooperative endeavor.”

He added: “Lifting the VAT-exempt status of cooperatives is only meant to plug massive leakages under the current tax system estimated as large as P25 billion a year. And . . . the cooperatives receive from the government tax perks of another P6 billion!”

The legislator said the system is abused by some enterprises seeking to cloak themselves from tax by forming cooperatives and taking advantage of the tax privileges.

The Position Paper of the PCC states that co-ops are recognized by the Constitution as engines to fight poverty, providing financial and social services especially in rural communities.

It emphasized that the Net Surplus of cooperatives is not income: “The “surplus”  generated would have been considered profit if the operation is capitalist in nature, but rather as “savings” because every single amount of the “surplus” is returned to the member-patrons in the form of interest on capital and patronage refund.  Hence, there is no “profit” to tax a cooperative.”

On the legal aspects, the Position Paper cited the 1987 Constitution which considers co-ops as “instrument for social justice and economic development,” under Section 15 of Article XII.”

This article was also published at http://natcco.coop/index.php/home-2/359-nationwide-protests-vs-tax-exemption-repeal.