Coop representatives vow to fight removal of VAT exemption

The party-list representatives of the cooperative sector will oppose the provision in the government’s tax package lifting the value-added tax (VAT) exemption being enjoyed by cooperatives in the country, Agricultural Sector Alliance of the Philippines (AGAP) party-list Rep. Rico Geron said on Monday.

During the “Ugnayan sa Batasan” press briefing, Geron said he would even be willing to lose his chairmanship in the House of Representatives cooperative development committee by voting against the administration pet bill.

He said he it would be a disgrace for him to support the bill as a representative of the cooperative sector in Congress.

“Wala akong mapapakitang mukha (kung suportahan ko yun) (I could not bear facing my constituents if I support it),” Geron said.

The House leadership of Speaker Pantaleon Alvarez stripped members of their key committee posts for voting against the administration pet bill seeking to restore death penalty on drug-related offenses.

READ: Arroyo, anti-death penalty solons ousted from key posts 

Geron said the party-list cooperative representatives during last week’s caucus were given the chance to voice out opposition on the bill that would unduly burden the sector they represent.

“Kami sa coop sector, malaya na nakapagpahayag, and we’re very vocal about it from the very beginning. Kahit kasama ako sa majority and the rest of the party-list coalition, pinapahayag namin ang aming opposition sa provision na nagsasama sa coop na alisan ng tax exemption privilege,” Geron said.

(We in the cooperative sector are free to express our opposition. We’re very vocal about it from the very beginning. Even though I’m a member of the majority and the rest of the party-list coalition, we express our opposition to the provision removing the tax exemption privilege being enjoyed by the cooperative sector.)

According to House Bill 5636 filed by the Department of Finance and duly approved by the ways and means committee, the cooperative sector would be removed of the perk of VAT exemption in a bid to expand the VAT base and plug the tax leakage.

The bill states that among the transactions to be stripped of existing exemptions from VAT are:

Sales by agricultural cooperatives duly registered with the Cooperative Development Authority to their members as well as sale of their produce, whether in its original state or processed form, to non-members, their importation of direct farm inputs, machineries and equipment, including spare parts thereof, to be used directly and exclusively in the production and/or processing of their produce

Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered with the Cooperative Development Authority

Sales by non-agricultural, non-electric and non-credit cooperatives duly registered with the Cooperative Development Authority, with a share capital contribution of each member not exceeding P15,000 regardless of the aggregate capital and net surplus ratably distributed among the members.

DOF Undersecretary Karl Chua earlier said micro and small cooperatives, which comprise 91 percent of the cooperative sector, would still be exempted from the comprehensive tax package because of the provision of the bill increasing the VAT threshold for gross sales from P1.5 million to P3 million.

The bill states that the sale or lease of goods or properties or the performance of services other than those already mentioned in the bill would still be exempted from VAT provided that the gross annual sales and/or receipts do not exceed P3 million.

Chua said micro and small cooperatives earn not more than P3 million annually.

Geron said removing the VAT exemption perks of the cooperatives would jack up the interest in loans, thus affecting the small-time vendors and farmers relying on cooperatives to secure bank loans.

Geron raised the possibility that the interests on loans from cooperatives may increase by five to six percent based on the current rates.

“Ang mga banko, hindi direktang nagpapautang dun sa maliliit na naghahanap buhay tulad ng market vendors at farmers, because they look at them as non-bankable. So tsina-channel sa cooperative para ang coop ang may pananagutan sa banko,” Geron said.

(The banks don’t directly lend to the common folk looking for a livelihood like market vendors and farmers, because they look at them as non-bankable. So the banks channel it to the cooperatives so that the latter would be accountable to the banks.)

“Dahil dumaan yan sa coop, mataas ang interes na kanilang pinataw… additional interest para dun sa ipapahiram na maliliit na negosyante,” he added.

(Because the loans went through the cooperative, the interests would be increased, which would result in additional interest for the loans to be lent out to the small time vendors.)

The comprehensive tax reform package bill is set to be endorsed to the House plenary for the period of debates and amendments under second reading.

The administration’s tax reform package seeks to lower personal income tax, raise excise tax slapped on oil and vehicles, expand the value-added tax (VAT) base, among others. CBB/rga

READ: DOF files tax reform package, seeks reduction in income tax | Tax package proposal hurdles House ways and means committee