With the taxation battle at the forefront of credit unions nationwide, it is vital to remind legislators about the importance of the credit union difference and why they are essential to the 140 million Americans who choose credit unions as their trusted financial partner.
As the number one public policy issue facing U.S. credit unions today, it’s interesting to know that taxation challenges for credit unions did not just suddenly emerge, they’ve actually been around for a long time; not just in America — but worldwide.
In the early 1990s, credit unions in Australia faced a similar battle and ultimately lost their tax exemption status, resulting in unfavorable implications for the Australian credit union movement.
In addition to losing its culture, capacity for capital formation, and its ability to provide the products and services it was known for, credit unions in Australia experienced significant impacts across an eight-year span. In 2005, CU Times reported that Australian credit unions experienced:
- a decline in the number of credit unions, from 329 prior to 164
- a decline in the number of credit union branches, from 2,615 to 928
- a decrease in loan share from 5.5% to 4.4%
- a decrease in asset share from 1.2% to 1.16%
In 2005, CU Times interviewed Mark Lynch, former Deputy Chairman of Australian National Credit Union, Australia’s largest credit union and the Volunteer & Resources Manager with the Australian Credit Union Foundation. Lynch said that with no state leagues, “there was no venue at the state level for those credit unions that were opposed to taxes to do anything. Credit unions were unable to articulate the credit union difference. The government thought since credit unions behaved like banks they should be taxed like banks. We had no strategy beyond lobbying the government.”
Although many thousands of miles away, these snippets portray a possible depiction of what is to occur if U.S. credit unions are at risk of losing their tax exemption status. To avoid a similar fate, we must continue to band together to emphasize the credit union difference and explain why our tax status is critical in meeting the needs of the communities and people we serve. Educate your members to tell Congress, “Don’t Tax My Credit Union.”
For a full report about the credit union tax exemption crisis in Australia, read Filene’s Impact of Taxation on Credit Unions in Australia.
