Thursday, September 20, 2007
Bill - Hon. Faith Hazel Almario
Republic of the Philippines
THIRD YOUTH CONGRESS
Baguio City
Introduced by Faith Hazel Almario
AN ACT AMENDING SECTION 2, SUBSECTION A OF RA 6938 KNOWN AS COOPERATIVE CODE OF THE PHILIPPINES, AS AMENDED, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
Section 1. Article 62 Section 2 subsection (a) of the Cooperative Code of the Philippines, as amended, is hereby further amended to read as follows:
Article 62. Tax and other Exemptions. Cooperatives transacting business with both members and non-members shall not be subject to tax on their transactions to members. Notwithstanding the provisions of any law or regulation to the contrary, such cooperatives dealing with non-members shall enjoy the following tax exemptions:
(2) Credit Quasi Cooperatives with accumulated reserves and undivided net savings of more than ten million pesos (P10,000,000.00) shall pay the following taxes at the full rate:
Income Tax- On the amount allocated for interest capital. Provided, that the same tax is consequently imposed on interest individually received by members.
Section 2. Implementing Rules and Regulations. -The Cooperative Development Authority shall, upon, promulgate within thirty (30) days from the date of approval of this Act, the rules and regulations necessary for the
implementation of this Act.
Section. 3. Separability Clause. - If any provision of this Act is declared invalid or unconstitutional, other provisions hereof which are not affected thereby shall continue to be in full force and effect.
Section 4. Repealing Clause. - Any law, presidential decree or issuance, executive order, letter of instruction, administrative order, rule or regulation contrary to, orinconsistent with any provision of this Act is hereby repealed or modified accordingly.
Section 5. Effectivity Clause. - This Act shall take effect immediately upon its approval.
Approved,
Republic of the Philippines
THIRD YOUTH CONGRESS
Baguio City
EXPLANATORY NOTE
Given the increasingly alarming budgetary deficit and the undeniable lack of sources of funding, the government must now look at its taxing powers to raise the necessary revenues to meet its expenditures. We have a good idea of our revenue requirements. What is needed is the political will to push for the adoption of measures to relate to the revenue shortfall problem which, understandably, is immediately in the area of taxation and tax reforms.
The attached bill seeks to make cooperatives contribute more to the overall government revenues through a fair and simple system of cooperative taxation by passing the income tax directly to the members of the credit quasi cooperatives. The proposed legislation is designed to greatly enhance tax collection and significantly reduce the causes of revenue leakages.
Studies have shown that the actual maximum cooperative tax rate, currently 32% of taxable or net income, is actually much lower because of the erosion of the cooperative tax, which results from tax avoidance and inefficient tax administration made possible by the legal "manipulations" of the statutory deductions from income tax. Prevailing tax preferences - tax incentives, tax credits and tax exemptions -enjoyed by cooperatives which have no basis in sound economic policy are also a significant cause of cooperative tax erosion - as they represent revenues foregone. But this is another matter that should be addressed distinctly.
Credit quasi Cooperatives is creating way to not fully pay off their taxes even their earning is more than ten million pesos (P10,000,000.00). If were going to tax the members individually we would see clearly how much income the cooperatives is earning. It’s time for the government to get its fair share.
In this light, approval of the bill is earnestly sought.
Faith Hazel A. Almario
Labels: ways and means
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