The vice-president of the Irish League of Credit Unions has called on the Government to "set in stone" the relationship between the new Single Regulatory Authority and credit unions. Mr Jim McMahon said this was needed to safeguard the movement's ethos and philosophy.

He also said the league was willing to pay Deposit Interest Retention Tax (DIRT) once people with lower dividend payments were exempt.

Addressing some 5,000 delegates at the league's 40th a.g.m. at Belfast's Waterfront Hall, Mr McMahon said a clause ensuring that the 1997 Credit Union Act could not be overruled by the authority should be enshrined in legislation. He told The Irish Times: "We believe that the authority will be made up to a large extent of bankers and we don't believe there is a case for credit unions to be in it. We are regulated by the Registrar of Friendly Societies and we hope to continue that. However, we realise that we will be included in the authority whether we like it or not.

"When we are, then the special philosophy of credit unions needs to be acknowledged in legislation, not as some vague promise that some politician gives and forgets about three months later. The conditions of the relationship need to be set in stone."

On DIRT, Mr McMahon said: "We believe people with large amounts of money should be paying tax. But so many of our members fall into the lower income bracket - as many as 40 per cent of them are outside the tax net at all and we believe that we have to have an exemption at the bottom to protect these people."

After a dispute with the Government, which wants to levy DIRT on credit union dividend payments, a working group within the league has decided to seek an exemption on the first £375 (€476) of its dividend payment.

The group said DIRT should be paid at a rate of 20 per cent on amounts from £375 to £650 while people earning more dividend should enjoy no exemption. Mr McMahon said the special status of credit unions - members are at the same time owners with only one vote no matter how many shares they hold and no possibility of making capital gains - justified them being exempt from corporation tax, the Consumer Credit Act and the Banking Directives.

"We should take complaints regarding these issues as a tribute of our growing strength and a recognition that our co-operative, non-profit, people-driven service is a threat to the dominant position of the banks and their huge profits.

"If we ever allow our ethos to change we can be sure that the exemptions we currently have will be eroded and eventually disappear," he added.

Mr McMahon said a lack of a unified position on fees had weakened the league's negotiating position with the Government.

Credit unions will now have to pay fees at a rate of 0.01 per cent of assets for the years ending September 1998, 1999 and 2000. The Government will review the position before September 2001.

"The Government itself was amazed to discover that at the rate proposed, the total fees paid would double in four years which they agree is excessive. But it is difficult to argue a position when half of the credit unions had already paid fees at the new rate, even if it was because they received a letter from the Government pointing out that they were breaking the law," Mr McMahon said.

The weekend a.g.m was the first to be held in Belfast since 1984. The league represents 3.2 million members throughout Ireland, making it the largest voluntary organisation in Ireland.