Minister urged to accept report on credit unions

The Minister for Finance, Mr McCreevy, has been urged to accept the recommendations of the working group on the taxation of credit unions.

The Labour Party has described the working group's recommendation that the first £375 of dividend earnings be exempt from tax as "fair and reasonable in the circumstances" and has called on Mr McCreevy to accept the group's report.

The group's recommendations - which were revealed in full in The Irish Times earlier this month - were backed by seven of the nine members, including independent chairman Mr Terence Larkin. However, the representatives of the Department of Finance and the Revenue Commissioners did not support the recommendations, which included proposals that credit unions remain exempt from corporation tax and that 20 per cent DIRT be applied to all credit union deposits and to the return on shares except where a member's return is £750 or less. In such cases, the first £375 in dividends would be tax exempt.

The working group also recommended that credit unions not be required to report interest or dividends on credit union savings.

Fine Gael's finance spokesman, Mr Michael Noonan, urged Mr McCreevy to proceed with caution to negotiate a settlement with the credit union movement rather than impose a new one against the will of members.

"There has been so much publicity already this year about questionable practices in the banking industry that the Minister should do nothing to inhibit the growth of the credit union movement, which has the confidence of so many members of the public," he said.

Democratic Left described proposals to tax credit unions as a "penny-pinching exercise that will serve only to limit the capacity of credit unions to invest in their own communities." "At a time when it is alleged the banks on an industry-wide basis did not deduct DIRT from clients' accounts by deliberate arrangement, it is ironic that Minister McCreevy's first and only anti-evasion measure is directed at the small saver and the credit union movement," Mr Pat Rabbitte said.

A spokeswoman for Mr McCreevy said he had received the report on September 30th and was looking at it at the moment. He is widely expected to publish the working party report shortly.

Meanwhile, the Irish League of Credit Unions said it hopes its members will not have to bear the brunt of Government wrath because of the misdemeanours of other financial institutions. It expects Mr McCreevy to give due recognition to its status as a community financial co-operative, not just as a mutual, when responding to the working group's report.