PORTAGE la PRAIRIE, Manitoba–A change in Manitoba’s provincial budget has erased a special tax deduction for credit unions.
Credit unions in Manitoba said they were not consulted prior to the change being made.
Brent Budz, CEO of Stride Credit Union, told PortageOnline.com the elimination of the tax deduction will mean a tax increase of 11% for CUs, or approximately $14 million annually. That’s 10% of credit unions’ overall income, he said.
"This tax deduction was something that was implemented back in the 1970s," Budz told PortageOnline.com. "And really recognized the difference between credit unions and chartered banks. And that boils down to the fact that the regulated capital that a bank can generate is far different than what a credit union can, and thus, the deduction was in place."
Budz said credit unions continue to meet with representatives.
"So, there's still an effort going on to discuss this change with the provincial government," he was quoted as saying. “But it really challenges every credit union to go back to their own shop, and to take a look at where those types of savings can be captured, without having an impact on what we deliver to members. That's the big challenge, and it's not unlike a lot of the other challenges that businesses face today."