The Harvard Cooperative Society yesterday pledged to retain its present rates patronage refunds this year. The Coop's eneral manager cautioned, however, that sts of the new Palmer St. textbook may force slight reductions in either 1966 or 1967.

"We are running into a few tight years, out with good management and tight expense control, we should be able to maintain the present rates," John G. Morrill said. Any reductions would probably be more than one per cent below the current rates of 10 per cent on cash sales and 2 per cent for charges, he indicated.

The four-story Palmer St. annex, to be finished by next winter, required a $1.7 million mortgage. City taxes on the annex and payments on the loan are the Coop's major cost pressures.

Morrill had feared that the Coop might have to lower the rebate this year, but yesterday he confidently reported to the Society's Officers and Directors that increased sales revenues have made this unnecessary. The stockholders and directors then proceeded to guarantee Coop members the current rates on all sales made until this June.

They also pledged the same rates for fiscal 1966 on the condition that sales grow rapidly enough.

Morrill estimated that during the next fiscal year--from July 1, 1965 to June 30, 1966--an increase of $700,000 over this year's estimated revenue of $10.2 million would be required. Increases during the past two years have been only $500,000, but Morrill expressed cautious confidence that the higher figure would be reached.

Even if the Coop attains the new sales level, it will have almost no money left to plough back into its capital improvement fund. Last year the Coop put $152,598 into this fund. Most of this money is now being used to finance the Palmer St. expansion, Morrill said.

The Coop only allocates refunds from sales made to members. Under federal laws such revenue is not taxable. Revenue from sales to non-members is taxable, and the Coop believes that even after taxes, such revenue can not be used for member refunds.

However, Morrill indicated that Auditors for the Society are currently studying this problem. There may be a possibility that if membership sales are not strong enough to sustain the current refund rates, some revenue from non-member sales could be transferred for this purpose.