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Credit Union Tax Bill Advances

Credit Union Tax Bill Advances

Posted - Feb. 26, 2003 at 7:57 a.m.



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SALT LAKE CITY (AP) -- The bankers' bill to tax the state's largest credit unions has been reported out by the Senate Business and Labor Committee.

House Bill 162, which passed the House last week, is in its 10th substitute form as legislators try to refine the bill that imposes a 5 percent corporate franchise tax on the state's three largest credit unions. The bill also sets up a task force to study the credit union issue.

The bill, sponsored by House Majority Whip Jeff Alexander, R-Provo, is being pushed by banks who say the three largest credit unions, America First, Goldenwest and Mountain America have outgrown their original purpose and are now competing unfairly with banks.

"We welcome competition as long as it's fair competition," said Howard Headlee, the president of the Utah Bankers Association.

Scott Earl, president of the Utah Association of Credit Unions, said the bill will have unintended consequences and create even more dissension between banks and credit unions.

"It's openly and undeniably hostile to all of Utah's credit unions," Earl said.

Earl also complained that credit unions did not have a chance to review amendments made to the bill in the Senate committee.

Sen. Dan Eastman, R-Bountiful, proposed numerous changes to the language of the bill, saying they were "cleanups" that clarified what credit unions were and when they should be taxed.

Sens. Gene Davis, D-Salt Lake, Mike Waddoups, R-Taylorsville, and Ed Mayne, D-West Valley City, voted against the bill Tuesday night.

Mayne amended the bill to make sure it applied only to the state's three largest credit unions and not the 121 smaller credit unions. Then he voted against the bill.

Waddoups tried to amend the bill so the three credit unions would not be taxed this year but would be put on notice that they could be. That motion failed.

Waddoups said he could not vote for a bill he sees as being slanted against credit unions.

"It's bad policy to punish credit unions that have been successful," he said.

Davis said he objected to credit unions, which are mutual organizations, being taxed like for-profit banks.

"I can't support this because it does away with exactly what they were created to do," he said.

(Copyright 2003 by The Associated Press. All Rights Reserved.)

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