Credit Unions will today press the Taoiseach and Tanaiste to implement a new tax regime for their members which has been stalled for 17 months by the Minister for Finance, Mr McCreevy.
Amid clear differences between Ministers, the League of Credit Unions is to meet Mr Ahern and Ms Harney today after two years of controversy over how they should be taxed. Mr Ahern agreed to the meeting after Independent deputies indicated that they might vote against the Government on the issue. ail.
Serious differences have emerged within the Government over the issue. The Tanaiste supports the introduction "as soon as possible" of a tax regime recommended by a working group on the issue. However, this new regime was opposed by Mr McCreevy's officials before the report was drawn up and Mr McCreevy says he is still "examining" the matter.
The bad feeling between Mr McCreevy and credit union representatives began after publication of the 1998 Finance Bill, which imposed a 20 per cent DIRT tax on credit union dividends. The credit unions had asked for such an imposition, but then joined the Opposition outcry against the proposals in the Dail.
Mr McCreevy abandoned his plans after the furore and set up a working group to examine the issue. A majority report of that group recommended the imposition of DIRT tax on dividends, but said that on the first £375 of dividends, savers should not be taxed at all. For the next £375, 20 per cent DIRT should be imposed, and savers earning over £750 in dividends would be taxed at 20 per cent on all their dividends. The representatives of the Department of Finance and Revenue Commissioners on the group opposed this exemption.
Ms Harney told the credit unions a fortnight ago that she supported the working group's proposals. In a letter dated February 8th to the president of the Irish League of Credit Unions, Mr Frank Lynch, Ms Harney's private secretary stated: "The League will know that in the Working Group's deliberations, and in the subsequent report, the Tanaiste's Department shared a common position with the League on the issue. She understands that the current view of the Minister for Finance is that any early implementation of the majority recommendation of the Working Group would give rise to difficulties, having regard interalia to the new complaint to the European Commission over the tax treatment of credit unions. She hopes, however, that it will be possible for the Minister to implement the majority recommendation of the Working Group as soon as possible."