Utah Tax Bill Could Drop State Revenues by $3.3 Million
SALT LAKE CITY - The punitive tax bill on large state-chartered credit unions now before the Utah legislature and aimed at increasing revenue to the state would in fact accomplish the opposite if SCCUs were to convert to federal charters, an analysis by Credit Union Times shows. Since many state-chartered...
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SALT LAKE CITY – The punitive tax bill on large state-chartered credit unions now before the Utah legislature and aimed at increasing revenue to the state would in fact accomplish the opposite if SCCUs were to convert to federal charters, an analysis by Credit Union Times shows. Since many state-chartered CUs-including the three largest now under attack-would likely convert to federal charters, the lost sales tax revenue as well as lost examiner fees paid now by state-chartered to the Utah Department of Financial Institutions could reach more than $3.3 million. A breakdown of the numbers, according to the Utah League of Credit Unions, shows the loss of the 5% Utah sales taxes, now paid by state-chartered CUs, would reach $2.6 million if all 87 state-chartered converted. If only the top three-America First Credit Union, Riverdale; Mountain America CU, Salt Lake City, and Goldenwest CU, Ogden-converted, the loss in sales revenue would hit $1.35 million. The tax bill -H.B. 162 – now before the state House Commerce and Labor Committee would impose a corporate franchise tax on CUs over $100 million in assets and a separate 30% fee-equivalent to the federal income tax-if those CUs sought to branch, merge or offer business loans. The bill’s sponsor, Rep. Jeff Alexander (R.-Provo), has maintained the measure drafted by the Utah Bankers Association, would not impact small CUs. However, the Utah League of Credit Unions has vigorously countered the claims in a statewide e-mail, radio and TV campaign and argued that the Alexander bill is designed to cripple the state’s credit union industry and would actually hurt the state’s bleak revenue picture. Provided the three large CUs did not convert, the bill’s sponsors contend a tax on America First, Mountain America and Goldenwest would instantly bring in $2 million in revenue. Michael Jones, chief examiner with the Department of Financial Institutions, said the loss of examiner fees from those three CUs would total $190,000 on a $4.4 million budget, but if all state-chartered CUs converted to a federal charter, the projected loss would reach $791,000. Noting all of the figures are still conjecture-since no bill has yet been passed or enacted-the impact on the department would be “felt,” he said, though he added it was too early to say if there would be a cutback in examiners. The Department, with a staff of 36, examines banks, CUs, as well as industrial loan companies and mortgage firms. If there are state-to-federal charter conversions, “there are several venues we could follow,” explained Jones. “We would simply have to talk to the various industries,” he said “to see what kind of adjustments would have to be made” to replenish lost revenue without cutting examiners. -
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