Good afternoon!
Today marks an important point for our dream of a drug-free society. The Nutriwealth MPC’s bold step to venture into a program on drug rehabilitation is very timely and relevant as the government pushes hard to win its drug war.
As we break ground for a Holistic Rehabilitation Center, I commend you for taking this path to development. They say that drug addiction is a consequence of poverty or lack of opportunities for the millions of drug victims. Perhaps there is some truth in this theory, that is why rehabilitation and reintegration should come together as the most important component of the anti-drug campaign.
Killing of drug addicts is not the end of it. Today we are beset with these millions of drug users and pushers who want to change their lives. Your coop’s initiative is very much welcome and l do hope that the intervention that this rehabilitation center will provide will pave the way towards bringing the drug victims to their normal lives.
The rehabilitation process could be challenging because we are rehabilitating both the physical and mental health. I am confident that you could handle this program well.
Rehabilitation is a critical step in making the lives of these victims productive once again. After the rehabilitation, comes reintegration where we should be able to provide livelihood opportunities for them so they will not revert back to drug addiction.
Our cooperatives will play a big role post-rehabilitation. Cooperatives can create a program to absorb rehabilitated drug victims and make them productive members of the community. I believe we can do this together.
President Duterte will definitely welcome the initiatives of the cooperative sector. Through these efforts we can show that the cooperative sector is not only a partner in alleviating poverty, we are also a partner in making our society drug-free.
So my friends, I give my 101% support to your endeavor. Let’s work together towards bringing hope to these victims of illegal drugs.
Thank you and good day to all of you.
POSITION PAPER RELATIVE TO THE IMPACT OF THE DOF PROPOSED TAX REFORM MEASURE TO THE COOPERATIVE SECTOR
Rep. Anthony Bravo, Coop-Natcco PL
Cooperatives are strong partners of the government in uplifting the lives of the poor and underprivileged Filipinos. ln fact, Article 2 of RA 9520 declares the policy of the State “to foster the creation of cooperatives as practical vehicle for promoting self-reliance and harnessing people power towards attainment of economic development and social justice”.
There are 26,243 cooperatives registered with the Cooperative Development Authority as of June 2016 with massive membership of 14 million Filipinos. Reporting cooperatives in 2015 have consolidated assets of P Z78,330,074,172.12 and a total volume of business of P335,l93,037,310.08.
The cooperative sector contributes to national development. First, cooperatives generate employment. December 2015 data of the CDA shows that cooperatives generated 520,758 direct employment and 1,923,047 indirect employment, for a total of nearly 2.5 million jobs for Filipinos. Second, the cooperatives sector contributes to economy. ln 2010, the coop sector contributed 3.12% to the country’s Gross Domestic Product. Third, cooperatives take part in tax collection. in fact, cooperatives had withheld taxes amounting to P3.9 Billion in 2015.
We are strongly against elimination of any tax exemption privilege of cooperatives. Cooperatives have been assisting people in the grassroots especially the marginalized poor, under the principles of self-help, self-responsibility, democracy, equality, equity and solidarity. To remove certain tax exemptions of coops will undermine these principles.
The Philippine Cooperative Code or RA 9520 specifically Art. 60 is instructive on the tax treatment of cooperatives, to wit:
ART. 60. Tax Treatment of Cooperative. – Duly registered cooperatives under this Code which do not transact any business with non-members or the general public shall not be subject to any taxes and fees imposed under the internal revenue laws and other tax laws. Cooperatives not falling under this article shall be governed by the succeeding section.
The following are the VAT exempt transactions under NIRC specifically Section 109, par. (L)(M)(N), as amended by RA 9337
Sec. 109(l)(L) 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;
Sec. 109(1)(l\/l)Gross receipts from lending activities by credit or multi- purpose cooperatives duly registered with the Cooperative Development Authority;
Sec. 109(1](N) Sales by non-agricultural, non- electric and non-credit cooperatives duly registered with the Cooperative Development Authority: Provided, That the share capital contribution of each member does not exceed Fifteen thousand pesos (P15, 000) and regardless of the aggregate capital and net surplus ratably distributed among the members;
The rationale behind this exemption lies in the circumstance that these are prime commodities, basic needs and other preferred goods and services. VAT being an indirect tax that sellers may pass-on, prices would tend to escalate if VAT is applied. The goods produced and services offered are primarily consumed or availed by lower-income members of the cooperatives. Thus, it may in a sense instill some public interest in it.
A cooperative is distinct from all other organizations. It has no systematic aim to make a profit, its administration are essentially on a voluntary basis. it is an autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles.
The proposed measure will remove for example Sec. 109[1](M)Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered with the Cooperative Development Authority in the list of exempt transactions and we cannot agree on this. Why? The money borrowed by member owners are also their own money. The earnings of coops from these lending transactions is called net surplus not profit and this is returned to the member borrowers in the form of dividend and patronage refund.
That is why we believe that tax treatment on cooperatives should not be the same with corporations. We would like to emphasize that cooperatives are people-based enterprises and are not profit-driven. Unlike corporation where profits are divided to only few individuals, cooperatives have massive memberships and net surplus is divided among them equitably.
Another reason for our opposition to the proposal to lift the coop’s exemption from Value Added Tax arises from the fact that majority or 91% of cooperatives in our country are under the category of micro and small while large and medium-sized cooperatives account for only 9%. There is imbalance in the development of cooperatives as micro and small cooperatives own only 13% of the aggregate assets of the coop sector while the 9% medium and large coops control the 87% of coop assets. The sustainability of micro and small cooperatives will be put on line and we don’t want this to happen.
Tax exemption enjoyed by cooperatives is a balancing measure to level the playing field of doing business between corporations owned by only few shareholders and cooperatives co-owned by hundreds or thousands members. This proposal on taxation will directly hit 7,421 agricultural coops owned and managed by the poorest sectors such as the farmers and fishermen.
So we reiterate our position to preserve the tax exemption privileges of cooperatives as stipulated in the Philippine Cooperative Code or RA 9520 and its Implementing Rules and Regulations.
