Credit unions in appeal on taxation

Credit unions are at an impasse with Government and face stalling tactics from financial institutions over the issue of taxation, members of the Irish League of Credit Unions told a Oireachtas ail the committee yesterday. The league's vice-president, Mr Jim McMahon, said its leadership could not even get a meeting with the Minister for Finance. He said the league wanted the first £375 of credit union savings exempted from tax and savings between £375 and £750 taxed at a rate of 20 per cent as a working party report had recommended.

He said a blanket DIRT regime, as proposed for credit unions by Mr McCreevy, would not work as 41 per cent of members were outside the tax net.

Mr McMahon appealed to members of the committee to table amendments to the Finance Bill if recommendations of a working party on credit union taxation were not implemented. He told the Oireachtas Joint Committee on Finance and Public Service that reports that credit union candidates may stand in the next election reflected the growing unease among activists and not the policy of the league.

Speaking in the Dail last night, Mr McCreevy said it did not seem prudent to contemplate a new form of accounts on which interest was neither liable to tax nor reported to the Revenue in the light of recent DIRT and tax evasion.

Referring to a complaint to the EU by financial institutions about the existing credit union tax regime, Mr McCreevy said that any further legislative initiative at this stage had the potential to aggravate the situation.