The Minister for Finance and the credit union movement are likely to resolve their dispute over reporting credit union savings when they meet in Dublin this morning.
Mr McCreevy confirmed yesterday that he is willing to amend the controversial Finance Bill proposals to require the reporting to the Revenue Commissioners of the names of individuals receiving dividend payments of over £500.
The Irish League of Credit Unions (ILCU) has proposed instead that a 20 per cent retention tax be collected on dividends from shareholdings of over £15,000. Such dividends would be about £700 per annum at current rates.
Credit union members would therefore pay 20 per cent tax on dividends of over £700 per year rather than Mr McCreevy's proposal of full-rate tax on dividends over £500.
A spokeswoman for the ILCU said yesterday that it accepted the other aspects of Mr McCreevy's proposals, including the retention of the credit unions' exemption from Corporation Tax and the imposition of 20 per cent DIRT tax on deposit interest, as opposed to share dividends.
Following his meeting with the ILCU representatives this morning, Mr McCreevy is likely to report to the Cabinet on the situation. Ministers are understood to have been annoyed at the emergence of the row and are anxious to have it defused as soon as possible and before the campaigns in the two forthcoming by-elections get under way.
Mr McCreevy told reporters in Brussels yesterday that he and the credit union representatives would examine how to deal with "sizeable" dividend payments when they met this morning. The ILCU, which had itself urged him both to impose DIRT tax and not to impose Corporation Tax, had suggested a special tax on large dividend payments, he said.
The only reason he had suggested a system of notification of dividend payments above £500 was that he thought it would be simpler.
He said the scope of his proposal according to the ILCU's own figures would affect only 1 per cent of credit union shareholders.
Of the £1.5 billion in credit unions only 10 per cent was in the form of deposits, with the balance in share accounts. Ninety-nine per cent of these share accounts contained less than £10,000.
Mr McCreevy expressed bewilderment at the escalation of the row. "I didn't initiate this debate," he said. "I did not want to do anything good, bad or indifferent to credit unions in the Finance Bill, until they sought to see me in December."
The League of Credit Unions had at that stage asked to be taxed, Mr McCreevy maintained, and this was not something that finance ministers were used to. "It all goes to show that we should beware of Greeks bearing gifts."
The Democratic Left spokesman on finance, Mr Pat Rabbitte, yesterday called on Mr McCreevy to withdraw his "preposterous and mean-minded proposals" which were "the action of a Government that knows little, and cares less, about the small saver".