The Minister for Finance, Mr McCreevy, yesterday denied he had made his first "U-turn" last year with proposals for the Irish League of Credit Unions.

He was accused by Fine Gael's finance spokesman, Mr Michael Noonan, of being "vindictive" with the credit unions ever since he "got his fingers burned" in the Finance Bill last year.

Speaking of the controversy surrounding proposals in the Finance Bill last year, Mr McCreevy said he had not brought forward proposals for the credit unions in the budget.

He agreed to meet the credit unions and he accepted their proposals which included putting DIRT on credit union savings. When he brought forward the proposals in the Finance Bill of February 1998, it "started off a storm of protests from individual members".

Following that "I withdrew the proposals", Mr McCreevy said.

He added that "my first mistake was to agree to meet the credit unions and the second was to go along with its proposals which then did not meet with universal agreement".

Mr McCreevy said he had established an independent working group to examine the issue of taxing credit unions. The group had failed to reach agreement but the chairman recommended that a certain amount of tax free savings for credit union members should be allowed.

The Minister said he was "fully conversant" with the league's views as contained in the working group's report and thus had no plans to meet it. "I am giving this matter ongoing consideration and as yet have no proposals to amend the law in this regard."