TALLAHASSEE, Fla. – It’s been three weeks since the Florida Credit Union League sent a South Florida daily newspaper, the Sun-Sentinel, a response to an editorial the newspaper ran last month calling for the taxation of large credit unions. The League is still waiting to see its response in print. The opening statement to the April 27th editorial “Time to Revise Tax Exemption” written by the South Florida Sun-Sentinel Editorial Board set the article’s tone: “It’s time for the Legislature and Congress to rethink the tax exemption for credit unions.” After offering their reasons why credit unions are tax exempt – they “originally were formed to serve limited groups of people who usually worked for a single employer”; “for much of their history, they catered to select groups of members and had short menus of financial products, like savings and checking accounts and car loans”; “credit unions are more affordable because they charge low fees, if they charge anything at all” – the editorial’s writers continue to lay out their case for why credit unions should now be taxed. Among the reasons they stated were: some credit unions have more “customers” than small banks; “the assets of larger credit unions top the $1 billion mark, a figure that is much, much higher than a lot of community banks”; many credit unions now charge fees for services; and lastly, “a few have fairly elegant headquarters.” “Quite frankly, credit unions that look like banks, grow like banks, and charge like banks can afford to pay taxes just like banks,” the authors wrote. What is particularly disturbing about the article, said Mark Ivester, the Florida League’s vice president, communications and public relations, is its reference to the study recently conducted by Florida TaxWatch, that the article said “estimates that the credit union tax exemption costs the state $30.3 million in revenues each year. The federal government misses out on another $102.2 million per year” (CU Times, April 23). The newspaper editorial made it clear that “this is not a call for a broad credit union tax. There are good reasons to keep the exemption on small institutions.however, it’s time to do a little research to see just how extensive tax exemptions should be.at a time when vital and worthwhile programs are being slashed, government cannot afford to blindly keep an exemption for a purpose that may no longer be served.” In the League’s response penned by FCUL President/CEO Guy Hood, he quoted the preamble to the Credit Union Membership Access Act: “Credit unions, unlike many other participants in the financial services market, are exempt from Federal and most State taxes because they are member-owned, democratically operated, not-for-profit organizations generally managed by volunteer board of directors and because they have the specified mission of meeting the credit and savings needs of consumers, especially persons of modest means.” Hood continued to write that, “The credit union tax exemption, as Congress determined in 1937, 1951, and again in 1998, is not based on the size of a credit union, nor the services it offers. Credit unions exist to serve their members. Surveys conducted by bank trade groups annually rate credit unions higher in customer satisfaction than any other financial institution. Credit unions have obviously done their job well.” Hood also called attention in his letter to the rising number of untaxed banks in Florida – up 300% over the last seven years, from 18 in 1997 to 55 in 2003. “The total assets of untaxed banks in Florida now stand at $11.1 billion. One untaxed bank in Miami alone has total assets of $2.1 billion.A spokesman for the Florida Bankers Association was quoted recently as saying he had no problem with credit unions, but that he objected to large tax-exempt credit unions. I wonder how the bankers feel about large tax-exempt banks?” Hood stated. “Nobody from the newspaper called to speak with us to get our comments for this editorial before it was published,” said Ivester. “You’d think if someone’s going to write something like this, then they’d want to talk with us and get our opinion first. “When the Florida TaxWatch study came out, we tried to tell people that the group enjoys a tremendous amount of credibility. Obviously it was enough to get the Sun Sentinel worked up to write about the study’s findings,” Ivester added. -

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