House Panel Votes to Tax Credit Unions

House Panel Votes to Tax Credit Unions

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SALT LAKE CITY (AP) -- Score one for the bankers.

A House panel voted Wednesday to tax Utah's three largest credit unions, which have been accused of aggressively expanding at the expense of Utah banks and arranging commercial loans for more than a $250,000 limit.

"A bill we do not want passed out of committee. Bottom line, it's punitive," said Scott Earl, president of the Utah League of Credit Unions. "We're going to work the entire House to defeat this legislation."

By a vote of 9-4, the House Business and Labor Committee advanced a measure that would force Mountain America, America First and Goldenwest credit unions to pay a five percent corporate franchise tax on earnings kept after each year.

Those credit unions would pay an additional tax of up to 30 percent if they continue to expand outside their home counties or decide to make business loans of more than $250,000.

That "competitive equity assessment" is intended to level the playing field and match banks' federal income taxes, although the revenue would go to the state.

The taxes would apply to any other credit union that amasses more than $100 million in assets and operates in more than one county.

"We're going after the bigger credit unions... that are acting like banks," said Drew Tuttle, who said he worked at First Utah Bank. "They've been hurting our industry."

More than 198 bankers, employees of credit unions and their customers packed a hearing room Wednesday to slug it out. Many credit union customers complained they had been turned down by banks for home mortgages or car loans and had to turn to a credit union.

Steve Anderson, Layton, who belongs to two credit unions, assailed banks by saying, "It's all about greed."

He said a credit union that isn't allowed to grow "turns into a dead horse."

More than half of all Utah residents or 1.3 million belong to a credit union, ranking Utah third among states in per-capita membership, Earl said.

"This is a strong credit union state. People love their credit unions, he said.

Brent Hill, owner of Daniel's Summit resort, a popular snowmobile retreat, said several banks turned down his request for a $3 million loan to build a lodge, but a credit union "jumped right on it." He got the loan in six weeks.

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

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