Electric cooperatives warn of higher rates with VAT
Wednesday, December 15, 2004
ELECTRIC cooperatives nationwide will be forced to increase their rates if the government decides to lift their value-added-tax (VAT) exemption, their representatives said Monday.
“The average sale cost of electricity of 5.50 pesos per kilowatt-hour will go up to 6.05 pesos per kilowatt-hour,” they said in a position paper in which other cooperatives also voiced out their opposition to the proposal.
“Industries in rural areas connected to cooperatives will also increase their costs correspondingly. It must be stressed that electric cooperatives primarily serve the unviable areas,” the electric cooperatives said.
The paper was read during a hearing of the ways and committee at the House of Representatives.
Other cooperatives exempted from VAT -- those in agriculture, market vendors, teachers, producers, and credit and housing -- warned of similar increases in their goods and services if the scheme would be imposed on them.
They explained that they were non-profit and that the net surplus they generated were savings that were "fundamentally non-taxable" as they would be returned to their members.
“Cooperatives source their financing for operations and business activities from the money of their members who mostly come from marginalized sectors of society,” they said.
“And taxing the members now for these goods and services will be detrimental to the growth of the cooperative. It must be emphasized that cooperatives do not source their financing from banks or large investors who only speculate for profit,” they said.
And even if they were exempted from VAT, cooperatives said their members would still pay the tax whenever they would purchase goods and services.
Negros Oriental Representative Negros Jacinto Paras questioned why the government was singling out the cooperatives.
Paras said VAT should be imposed on all industries presently enjoying these tax exemptions.
posted by philpower @ 11:49 AM,
