Hands up, how many of you do business with a credit union, rather than one of those big banks with gleaming towers on Bay street? The answer across Canada is 11 million people.
Out here on the prairies credit unions are hugely popular. Everywhere I travel in Winnipeg, there seems to be a shiny new branch being built. They control billions of dollars worth of savings in this part of the country, and in many small communities, credit unions are the only option when it comes to banking.
My former MP, Regina Liberal Ralph Goodale, was minister of Finance for a few years. He reminded me that buried in the latest budget implementation bill is a measure that really socks it to credit unions.
Since 1972, they have been taxed as small businesses. It was preferential treatment aimed at leveling the playing field for them as they tried to compete with the banks.
When Jim Flaherty brought down his budget in March, this preferential treatment came to an end. It will bring in an additional $75 million to the federal treasury, but for some of the smaller players, it will make life a lot more difficult.
Needless to say Ottawa consulted no one from credit unions about the move. Flaherty and Stephen Harper are fond of pounding their chests about how well Canada’s banking system held up during the financial crisis that killed some of the big players in other countries. But everything comes at a price.
All banking institutions are faced with tougher capital requirements in the wake of what happened in 2008. The credit unions did not need to be hit with higher taxes.
It’s another example of the biggest lie that we hear from politicians of every stripe. Bush 41 said it first in the U.S. years ago when he declared “read my lips. No new taxes.”
It wasn’t true then, and it’s certainly not true in Canada in 2013.
I’m Roger Currie