29 August 2013

Raising taxes on credit unions is a retrograde step

Prior to 1972, Canadian credit unions were exempt from all income and capital taxes. In many countries, including the United States, they remain tax exempt at both the state and federal levels. The justification is their non-profit nature.

In 1972, credit unions were brought into the tax syatem, paying the small business rate. The federal small business rate is now 11 per cent compared to the general corporate rate of 15 per cent. The ceiling is $500,000, however credit unions receive a special exemption for amounts over this up to a certain limit. The federal government's spring budget intended to phase out this exemption, bringing credit unions under the general rate. (Actually, through an error it would have raised credit union rates much higher but it has promised to correct the error.)

Taxing credit unions like private corporations is a retrograde step on at least two grounds. First, credit unions are one-member/one-vote democracies unlike the plutocratic one-share/one-vote structure of private corporations. If we believe in democracy, we should encourage democratic institutions over plutocratic ones.

Second, in a world riven by competition, co-operation is to be enscouraged as a superior moral value over competition. How much nobler a national and international motto "we must co-operate in the global society" would be rather than the currently rampant "we must compete in the global marketplace."

Rather than raise taxes on credit unions, we ought to be returning to the pre-1972 regime of tax exemption. If the highly competitive Americans can recognize their special nature, so can we. I fear, however, our current federal government will not have much time for either the democratic argument or the co-operative one.

1 comment:

  1. How about we put three words in front of the name of the credit union. Would that fix it? "The church of" insert name of Credit Union