Credit Unions Fighting Proposed Tax Bill

Credit Unions Fighting Proposed Tax Bill

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Government Specialist Richard Piatt reportingUtah's League of Credit Unions is fighting a bill about to go before the Utah Legislature.

It would impose a business tax on Utah's larger credit unions, and would set limits on how Credit Unions could expand in Utah.

Originally, talk around the Capitol was that this bill would be a 'compromise'. But today, the bill's sponsor backed away from that word, and in fact credit unions were not involved in the creation of the bill.

Representative Jeff Alexander is carrying the bill because he says credit unions should get 'back to basics', in his words.

His bill would force credit unions with more than $100 million in assets to pay taxes. Taxes would also apply to credit unions that expand to more than one county.

It would limit credit union mergers, limit commercial loans and require new disclosures. An option would be to pay a 30 percent equity fee or convert to a mutual savings bank.

Credit unions are responding with full-page ad to run in this Sunday's papers, as well as with sharp criticism at the Capitol.

"This bill is a punitive bill. It would unfairly tax credit unions. Credit unions haven't been given any input into the process. Representative Alexander has worked solely with the banks on this issue," says Scott Earle with the Utah League of Credit Unions.

"They don't want to compromise. We tried to do that four years ago. They've been trying to work their way around the compromise. That's the problem," Alexander says.

The 1999 compromise limited how credit unions would grow. Banks say some credit unions are violating the agreement by expanding where they shouldn't, using profits the banks argue should be taxed.

Credit unions are lobbying hard against this bill. It will get its first committee hearing next Wednesday, which is sure to bring strong feelings on both sides.

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