Less tax for credit unions
Photo: Contributed
Interior Savings Credit Union is applauding the provincial government’s decision to hold off on a tax increase for credit unions.
As part of its next budget the government will announce a one-year pause to a planned elimination of a “preferential tax advantage” aimed at credit unions.
Finance Minister Michael de Jong says the pause will allow the government to “consider the complete picture of the regulatory environment in which B.C.’s credit unions operate.”
The province had planned to phase out the small business tax rate for credit unions over a period of four years.
The rate was originally put in place to help the province’s cooperatively owned credit unions compete against larger, corporate-owned banks. Credit unions have been lobbying for years to keep it in place.
Kathy Conway, the president and CEO of Interior Savings, explains that credit unions are required to maintain certain levels of capital, similar to banks. Unlike banks, however, credit unions have a harder time securing capital, so maintaining the required amount is more difficult.
Conway says she is “pleased” the government listened to credit unions and looks forward to “continued consultation … to ensure B.C. credit unions can maintain our current level of investment in local communities.”
de Jong points out that credit unions are “the only class of financial institution that has had access to this preferential tax treatment, providing significant savings compared to other types of corporations.”
Even with the preferential tax advantage for credit unions fully phased out, he says, credit unions would still pay approximately 40 per cent less in total tax than they did in 2001.
However, most of those cuts have been across-the-board, applying to institutions far and beyond credit unions.
The planned one-year pause will have to be approved by the legislative assembly.
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