I propose, with your permission, a Cheann Comhairle, to take Questions Nos. 44 to 47 together.
Credit unions are, and always have been, under the general tax laws liable to income taxation on their operating surpluses, as computed for tax purposes in the same way as other concerns carrying on activities involving the acceptance of money and the lending of money at interest. In particular, credit unions are registered industrial and provident societies in accordance with the provisions of the Credit Union Act, 1966, which followed generally the recommendations of the Committee on Co-operative Societies set up by the Minister for Industry and Commerce. The committee had recommended that the Industrial and Provident Societies Acts should be suitably amended in order to make provision for the registration of credit unions. The 1966 Act, in so providing, removed the legal difficulties in the way of the formation of credit unions in this country by providing a suitable legislative framework within which they could operate and which had been represented by the credit union movement as necessary for their future development. Indeed, since the passing of that Act, credit unions have grown in number and in size. Today, there are, it is understood, about 340 credit unions with assets of some £10 million, so that they no longer fall within the category of money clubs or holidays clubs which are, in effect, concessionally charged to tax on a restricted basis similar to that applied to credit unions themselves up to the time they became registered industrial and provident societies.
The question of the tax position of industrial and provident societies, or co-operative societies as they are commonly known, was considered specifically by the Commission on Income Taxation which recommended, that in general, these societies should be charged to tax in the ordinary way. The Government accepted the principle of the commission's recommendation and provision was made accordingly in the Finance Act, 1963. As registered industrial and provident societies, credit unions are accordingly fully liable to tax on their surpluses.
I might add that the effect of taxation on credit unions is unlikely to be significant. Under statute credit unions are favourably treated in regard to payment of tax in as much as interest and dividends paid to their members are deductible in computing their tax liability, being assessed to tax in the hands of the members. Only the remaining profits are assessed to tax and, in so far as credit unions are normally operated on a non-profit making basis, these profits are not presumably of a sizeable order. It is estimated that the average tax charge per credit union would be about £100 and that the total amount of tax payable by credit unions annually should be of the order of £30,000.
I recognise the important social role being played by credit unions and I am accordingly examining as sympathetically as possible their position under existing tax law.