Proposed B.C. tax hikes would strain credit unions

The B.C. provincial tax increases proposed by NDP Finance critic Bruce Ralston will negatively impact the co-operative banking sector in the province, says First West Credit Union.

Read: First West Credit Union, Qtrade extend partnership

Ralston promised the NDP would increase the province’s corporate income tax to 12%, as well as reinstate a 1% corporate capital tax on financial institutions with local head offices and capital holdings of more than $20 million.

This would make B.C. the only province in Canada to impose a corporate capital tax on credit unions.

If brought to fruition, this plan could significantly harm the credit union system and the communities served, says First West.

Read: Canadian credit unions post string 2012 growth

“B.C.’s credit unions give back millions annually to the communities,” says CEO Launi Skinner. The tax increase would cut their services and resources.

Not to mention, “there are dozens of communities in B.C. where member-owned credit unions are the only banking option. Approximately 42% of people are served by a credit union, so it’s crucial that our government support financial co-operatives for the benefit of those banking locally.”

Just weeks ago, Budget 2013 revealed plans to begin the phase out of a tax deduction previously available to credit unions. On top of these two proposed measures, the province’s provincial government regulators have increased requirements for credit unions’ capital holdings.

Read: Small credit unions squeezed by Budget 2013

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.