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SALT LAKE CITY – NCUA’s field of membership authority has come under fresh attack here from anti-credit union Utah lawmakers who are considering sending a petition to Congress urging lifting of the tax exemption. “My idea is we send a resolution to Congress expressing our desire that these large institutions . credit unions and banks alike, be treated similarly when it comes to taxation,” urged Sen. Dan R. Eastman, a Republican from the town of Bountiful who has long been identified with the state’s banking lobby. Eastman spoke at a session of the Financial Institutions Task Force, a joint House-Senate panel which has been looking at new initiatives to tax CUs in the 2005 legislature. The Utah League of Credit Unions has in the past called the Task Force deliberations a sham, accusing some panel members of being frontmen for the Utah Bankers Association in its attempt to clamp down on CU expansion. Eastman, who is co-chairman of the Task Force along with another CU antagonist, Rep. Jeff Alexander (R-Provo), and a sponsor of the 2003 law which triggered a flight to federal charter from the state’s largest CUs, warned that NCUA policies in approving conversions and allowing FOM expansion is helping to erode the state’s tax base. “We believe, especially with the status of the federal charter, that Congress needs to act-to be involved,” urged Alexander. Perhaps by coincidence or design, the panel’s discussion of NCUA policies came on the same day as a U.S. District Court judge here began hearing oral arguments in the celebrated American Bankers Association suit filed in July 2003 challenging NCUA’s authority to grant a six-county FOM expansion to Tooele FCU of suburban Salt Lake. (see story on this page) The FOM approvals were later granted to other large Salt Lake CUs and smaller Utah CUs which decided to switch to a federal charter to escape the prospect of taxation and a barrier to business loans under a harsh anti-CU law enacted in 2003. At the Oct. 7 Task Force session, both Alexander and Eastman said a resolution to Congress on NCUA policies is appropriate now and they said they hope to draft “either a report or a resolution” at their meeting next month but ultimately any action would have to be adopted by the legislature in January. Credit union backers on the Task Force said they opposed the resolution idea as premature. “I’m just kind of averse to asking the Congress to tax my constituents even more,” said Sen. Mike Waddoups, R-Taylorsville. “It seems a chicken way out. If we messed up this situation, we should be willing to fix it. “Maybe if we’re writing a resolution, I’m thinking maybe what we ought to do is send a resolution to the credit unions that are changing over to the federal charters and tell them that we do appreciate them, that we recognize that they no longer have to pay sales tax in our state, but we’d like them to be state chartered,” said Waddoups. Waddoups said the legislature should be asking them “what we need to do to be more attractive to them.” That’s a point made by the Utah League in urging lawmakers next session to amend the 2003 law to reverse the flight to federal charter. Lawmakers also discussed general taxation and state’s rights issues, such as when or if it is appropriate for federal regulators to impact a state’s tax policies. State Sen. Tom Hatch, a Republican from Panguitch, said the Task Force should go ahead and make a policy statement. “What it boils down to is a state’s rights issue – whether we have the right to set tax policy, or whether federal regulators do.” [email protected]

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