BAGUIO CITY—The Network of Cooperatives in Northern Luzon has joined forces with other cooperative organizations in the different parts of the country in objecting to the attempt of legislators to repeal their tax exemption that could lead to “the eventual extinction of cooperatives.”
Rafael Gayaso, executive director of the Northern Luzon Federation of Cooperatives and Development Center, said aside from the repeal of their mandatory tax exemption, cooperatives are also “hounded” by the coverage of Republic Act 9510 or the Credit Information System Act.
It would mean additional expenses on their part and “runs counterproductive to the primary purpose of strengthening cooperatives in the countryside,” he said.
Under the tax reform program proposed by the Finance department, cooperatives will no longer enjoy their tax exemption as provided for under the provisions of RA 9520 or the Philippine Cooperative Code of 2008, and that cooperatives stand to be treated like corporations where they will be assessed a 30-percent annual income tax apart from other taxes that will be collected by the state.
Gayaso explained cooperatives are the extension of local government units in providing the needed assistance for the basic needs of marginalized sectors like the urban poor, farmers, housewives, among others.
“We want to send a message to our national officials that it will be the members of the marginalized sector who will be deprived of the cooperatives which are considered as the extension of the local governments in providing basic services to the less fortunate sectors,” Gayaso stressed.
He added the cooperatives are also questioning the inclusion of cooperatives in the coverage of the Credit Information System Act. In fact, cooperatives were not included as part of the law but the term “cooperatives” was deliberately inserted in the implementing rules and regulations of the law, which the group finds to be “irregular and unlikely.”
Gayaso pointed out the inclusion of cooperatives in the coverage of the Credit Information Corp., which is empowered to implement the CISA, will result in additional expenses for the cooperatives.
He also said cooperatives should not actually be covered under the law, considering they are not dealing with the public like banks and pawnshops but are directly dealing with their members, who are screened from the start.
He disclosed various cooperatives are intending to question the inclusion of cooperatives in the coverage of the CIC by filing the appropriate petitions before the concerned courts to prevent the imposition of the excessive P30,000 daily penalty against the cooperative starting July 1, 2017, once they will not subject their cooperatives to the CIC.
Gayaso admitted some cooperatives have purchased the software for their compliance to the CIC, but it entails excessive expenses considering the need to hire information technology experts and the replacement of their hardware to be compatible with the CIC software, among others.