The Government has agreed to work with the Credit Unions in order to resolve the issue of the taxation of deposits. After a meeting this afternoon in Government buildings, the Vice President of the Irish League of Credit Unions, Jim MacMahon, said that the recommendations of a working group that studied the issue would be examined by the Attorney General. The Taoiseach, Bertie Ahern, confirmed that these recommendations would be examined further in light of whatever decision the EU Commission takes on the matter.
This was the first meeting between the Government and the Credit Unions in nearly two years. The Taoiseach and the Tánaiste discussed the continuing row over the levels of DIRT tax that should be applied to savings accounts. Credit Unions are exempt from corporation tax and they do not have to deduct DIRT tax from interest or dividends.
Finance Minister Charlie McCreevy has not met the Credit Unions since 1998, when his proposed introduction of taxation in that year's Finance Bill had to be abandoned in the face of widespread opposition. Mr McCreevy had planned to apply DIRT to Credit Union deposits at a rate of 20%. A working group proposed that the first £375 of dividend income be tax exempt, with 20% levied on income up to £750. People with dividends over that figure would have the entire amount taxed at 20%. The Credit Unions want these proposals implemented. However the Minister has said that all interest and dividends should be subject to some tax.
