Small credit unions squeezed by Budget 2013

B.C.-based First West Credit Union has weighed in on the surprise announcement in Budget 2013, in which a tax deduction available for credit unions would be phased out over the next five years.

It’s expressed concern the changes would negatively impact most credit unions, but primarily small and mid-size businesses serving rural and under-served communities.

Read: Tax deduction reversal will hurt credit unions

“While the proposed budget changes won’t have a dramatic impact on larger credit unions like ourselves, it’s important that we speak up for the small and mid-sized [players] that provide accessible services,” says First West’s CEO Launi Skinner.

“Credit unions often times incur higher costs to operate in small…communities across our country.”

First West’s CFO Tom Webster adds the Government’s decision comes at a critical time in the country’s ongoing economic recovery. Not only are smaller unions’ tax rates now being increased, but their operating margins are also being squeezed since regulators are looking for increase capital held.

What’s more, Webster says, “The preferred rate was originally introduced to enable credit unions to build up their capital [since] we’re not able to issue shares in the public market. Growing capital is more important than ever, so it’s disconcerting that this deduction is being eliminated.”

Staff

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