Dáil Éireann - Volume 517 - 30 March, 2000
Written Answers. - Credit Unions.
Mr. J. Bruton Mr. J. Bruton
89. Mr. J. Bruton asked the Minister for Finance if he will report on the meeting on 24 February 2000 with the Irish League of Credit Unions; and if he will make a statement on the matter. [5902/00]
Mr. McCreevy Mr. McCreevy
Minister for Finance (Mr. McCreevy): The Taoiseach and the Tánaiste met with the Irish League of Credit Unions on 24 February, to discuss the league's proposals in relation to the taxation of credit unions. The EU aspect, which affects any taxation proposals, was also discussed at this meeting. Deputies will be aware that there are ongoing complaints with the EU Commission. The Irish Mortgage and Savings Association has made a complaint in relation to the current tax treatment of credit unions. This complaint alleges that the credit union movement in Ireland has benefited from preferential tax treatment by virtue of their exemption from corporation tax and from DIRT. The Irish Banker's Federation has also made a complaint which I understand relates to the position of credit unions in respect of consumer credit legislation.
 At the meeting, the Irish League of Credit Unions accepted the Government's position that complaints about taxation made to the EU Commission must be resolved before any further moves are made regarding the taxation of credit union savings income.
The Deputy will be aware that Mr. Pat Cox MEP received a letter from Commissioner Monti advising him that the Commission is currently examining the situation from the point of view of the state aid rules of the treaty. The Commissioner stated that the examination does not in principle preclude the Minister for Finance from reforming the credit union tax position. However, the Commissioner noted that any change made to the tax position may lead to different conclusions being arrived at. Consequently, any change in the law, at this point, which would give special treatment to the credit unions, could aggravate the situation in regard to the investigation by the European Commission.
The legal advice available to me is that there is no certainty that the decision on the most recent complaint by the Irish Mortgage and Savings Association will be the same as that given on the 1998 complaint which specifically related to the corporation tax exemption enjoyed by credit unions.
As was pointed out by the Taoiseach in his statement following the meeting with the Irish League of Credit Unions, there are also general equity aspects which must be considered in relation to all financial institutions as well as ensuring the integrity of the tax system.
The recommendations of the chairman of the working group on the taxation of the returns of credit union savings will be further examined in the light of whatever decision the EU Commission takes in relation to the complaints about existing tax law. I am advised that it is both rational and logical to take the view that if credit union interest and dividends are not taxed either in the hands of the credit union, as is currently the case, nor in the hands of credit union members as is proposed by the Irish League of Credit Unions, the same conclusion reached in 1998 by the Commission can no longer be reached.
Dáil Éireann 517 Written Answers. Credit Unions.