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Dáil Éireann debate -
Thursday, 16 Dec 1999

Vol. 512 No. 8

Written Answers. - Credit Union Savings.

Question:

54 Mr. Hayes asked the Minister for Finance when he will be in a position to meet with the Irish League of Credit Unions to discuss taxation matters; and if he will make a statement on the matter. [27367/99]

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. I believe a key consideration, which influenced their decision, is the fact 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 this matter ongoing consideration and as yet have no proposals to amend the law in this regard.
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