First West Credit Union welcomes BC Chamber policy calling for fair taxation

LANGLEY, B.C. (July 26, 2017) — On behalf of our 240,000 members across British Columbia, First West Credit Union extends its appreciation to the BC Chamber of Commerce on its policy advocating for a reinstatement of the small business tax benefit for the province’s credit unions.
 
“The Chamber’s policy draws a clear link between fair taxation for credit unions and the health and vitality of local economies across B.C., particularly in small and underserved communities” says Launi Skinner, CEO of First West. “The B.C. Chamber of Commerce has been a strong voice for businesses across British Columbia—we thank them for their support in advocating for policies that will help make B.C. communities thrive.”

The policy brought to light a key tax concern for credit unions: as member-owned co-operatives, credit unions rely almost entirely on retained earnings to raise capital. Taxes are paid out of a credit union’s retained earnings and as such, tax increases directly affects the amount that a credit union can lend to working families and small businesses in communities across British Columbia.

The policy is in harmony with the new provincial government’s recent platform commitments that promise a special tax status for credit unions in light of the important role that they play in supporting small business.

“We look forward to continuing the dialogue and to working with the government to make fair taxation for credit unions a reality,” Skinner says. Skinner notes that First West, Credit Unions of B.C. and the Chamber have been advocating for fair taxation for a number of years and feels hopeful that a change in policy may come soon.

In 2013, the previous federal government made controversial changes to the way credit unions were taxed. For 40 years prior, successive federal governments recognized the important differences between cooperatively-owned credit unions and shareholder-owned banks by providing a specific deduction to credit unions. When the previous federal government changed its tax approach for credit unions it triggered changes in both Saskatchewan and B.C.’s tax legislation. At the time, both Saskatchewan and B.C. gave credit unions a reprieve. In British Columbia, which has the largest credit union system in the country, no intervening action on taxation was taken by government and so beginning in 2016, the provincial tax burden for credit unions began to increase. In January of 2017, the previous provincial government introduced a one year tax increase pause while the Credit Union and Financial Institutions Act is being reviewed.