Jimmy Deenihan
Question:8 Mr. Deenihan asked the Minister for Finance the plans, if any, he has to meet the Irish League of Credit Unions in the near future; and if he will make a statement on the matter. [22656/99]
Priority Questions. - Credit Unions.
The report of the independent working group, which I established to examine the issue of the taxation of credit union savings, was presented to me in October of last year. Earlier this year I made the report publicly available. The group, which comprised officials from the Department of Enterprise, Trade and Employment, the Revenue Commissioners and the Department of Finance, representatives of the Irish League of Credit Unions, the Registrar of Friendly Societies and an independent chairman, failed to agree on a set of findings. However, the chairman recommended that a certain amount of tax free savings for credit union members be allowed. I have received written representations from the Irish League of Credit Unions and its members, in support of the recommendations made by the chairman of the working group.
When considering how best to proceed with the demands for tax free savings, including DIRT, for credit union members, one must be sensitive to the EU dimension. The EU Commission decided not to regard the corporation tax exemption enjoyed by credit unions as a State aid. A key consideration which influenced their decision is that the dividends paid out of such income are liable to income tax in the hands of the credit union members themselves. This benign attitude of the Commission to the corporation tax exemption could change if dividends were exempted from income tax up to a certain limit as recommended by the chairman of the working group. This is a point which complicates the issue and should not be overlooked by those now seeking an exemption of credit union dividends from income tax.
I am fully conversant with the views of the league as they were contained in the report of the working group. Consequently, at this stage I have no plans to meet with the Irish League of Credit Unions. The differing views within the working group reflect the complexity of this issue. I am giving the matter ongoing consideration and as yet have no proposals to amend the law in this regard.
Given that the league represents approximately 2.2 million people on the island and 1.8 million people in the Republic, the Minister should afford it the courtesy of a meeting. Why has he not met the league since February 1998? There must be a reason.
If I were as conversant with the views of my constituents in County Kildare as I am with those of the Irish League of Credit Unions, I would get 99 per cent of the vote in a general election. There is no other group in the country with whose views I am more conversant and I have the stabs in the back to prove it. There is no need, therefore, to meet the league again. I know its views and I have met its representatives previously. Its views were given to the working group and were reported on.
I set out in my reply the matters which must be given due consideration in any proposals which I might make at a future date on this topic.
It is obvious that the Minister has a vendetta against the Irish League of Credit Unions. The Minister mentioned the working group. Will he accept that six of the nine members of that group agreed with the recommendations of the report? That should be sufficient to warrant the implementation of the recommendations. Does the Minister intend to implement any of them at this stage?
I have the report and I am aware of the complexities of this issue. They are not all one sided. There is now another dimension which must be taken into account but which did not exist when the working group reported. The EU dimension was not a matter of consideration for the working group because the decision of the Commission was made after the group's deliberations.
There was a complaint to the EU Commission about the benign tax regime relating to credit unions in Ireland. The Commission examined that and gave its decision. That was after the working group reported to me. The decision of the Commission to take a benign attitude to the corporation tax exemption credit unions have under Irish tax law was influenced by the fact that the dividends and interest to members arising from their holding of credit union shares or deposits are liable to income tax. If one were to change that and go along with the recommendations made by the credit union, one would assuredly put at risk the corporation tax exemption which credit unions enjoy. That was taken into account by the Commission. It is not simply a matter of going along with the majority credit union report.
In light of recent events, Members should be slow to propose that any group of citizens should enjoy a tax exemption at the expense of other persons of the same status. A survey of the membership of credit unions shows members to have more or less the same profile as people who have accounts in other financial institutions. That survey is readily available. One should be particularly careful in this regard.
(Dublin West): Unless one is a racegoer. The Minister makes an exception for them.
The Minister has offered an exaggerated view of the EU position.
It is not.
Has the Minister any intention of making provision in the Finance Bill to put in place the more positive recommendations of the working group?
Provisions of the Finance Bill will be considered during its preparation.
That concludes Priority Questions.