I have just learned that hidden in the Federal 2013 omnibus budget was a clause that increased the tax that Community Credit Unions pay to the same levels as the big Banks. At first glance this may seem like a fair thing to do but those of us who have long given up on the banks poor service and high fees in flavor of far more personal attention at local Credit Unions know better. There is no comparison.
“Just like banks, credit unions are required to hold large amounts of capital, but unlike banks, credit unions rely primarily on retained earnings to meet these requirements. By increasing taxes on credit unions alone, the 2013 federal budget has made it harder for credit unions to grow and support local families, farms and businesses. Credit unions are proposing a new tax credit to re-establish a competitive balance between credit unions and the big banks. Based on growth in retained earnings, it is estimated that this tax credit will generate nearly $700 million in new lending to help businesses, farmers and families invest.”
Nor I might add do they have overseas operations primarily created to take advantage of a tax loophole that lets them avoid paying taxes on millions of dollars of 'profit', nor do credit unions pay their 'shareholders' and directors millions in compensation. As 'members' we do get a very modest profit share as part of our membership of the Credit Union and no doubt senior staff are compensated for their expertise but nowhere near the level that the banking bigwigs get.
Credit unions are the only financial institutions in over 380 Canadian communities and offer essential financial services that help to strengthen those communities and support local jobs. Meanwhile the big banks are closing branches which 'are not profitable'. A CFIB study of small business lending showed credit unions having an almost 20% share of small business lending across all financial institutions.
In short this is another case of lets tax the little guy and ignore the big guy whose tax accountants do everything in their power to hide income and avoid paying their fair share of taxes.
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