This is the letter sent to the Minis- ter for Finance last December by the Irish League of Credit Unions general secretary, Mr Tony Smyth:
21st December, 1997
Minister McCreevy Minister for Finance Office of the Minister for Finance Government Buildings Merrion Street Dublin 2
Dear Minister,
Thank you very much for meeting with us on the issues of taxation of credit unions and credit union members. We very much appreciate the direct exchange of views.
Our position is relatively simple. We are not a financial institution. We are, for the greater part, an open, community-based organisation, owned by our members, run by volunteers. Competition or profit are not on our agenda. We exist simply to serve our members. Our vision is of a level playing field in terms of social inclusion, dignity for and integrity of people, and to fill the gap where people and/or Government require assistance. This is the difference that is credit union.
We believe the country needs this difference and we trust that the Government will recognise and foster the credit union "self-help" ethos.
We, in the course of the meeting, identified three issues:
Corporation Tax on Credit Unions: We strongly suggest that the current exemption should remain.
Interest on Deposits: We recognise the need for change in this area and suggest the application of DIRT at 15% on all interest earned.
Dividends on Shares: We recognise the need for a revised approach given the increased limits on shares in the new legislation. We suggest that an exemption threshold of £15,000, above which retention tax should apply. This limit reflects current operational exemption limit, takes into account the special position of mutual income in tax law and the fact that almost half of credit union members are generally not liable for tax.
We contend that the continued recognition, within the law and the tax codes, of the distinct nature of the credit union institution and savings instrument (mutual share) is fundamental to our development.
I would appreciate if you could indicate, as soon as possible, what proposals, if any, you intend to introduce in the forthcoming Finance Bill in relation to credit union members.
Seasons Greetings,
Tony Smyth General Secretary