COLCHESTER, Vt.—The Association of Vermont Credit Unions last week shut down an attempt by Vermont bankers to sweep credit unions into a bank-related piece of legislation.
During a Ways and Means Committee meeting in the state legislature, the Vermont Bankers Association (VBA) brought up the credit union tax status during discussion of an increase in the state’s bank transfer tax. Vermont imposes a quarterly tax on the average deposits held by banks doing business in the state; therefore, out-of-state banks pay on their deposits resident in Vermont. The bankers’ argument was in response to a budget proposal to raise the current rate, which has remained stable for 19 years.
In testimony before the House Ways & Means Committee last week, the VBA and two of its members objected to a proposed increase in the bank transfer tax, and aimed the focus of much of their testimony on the tax treatment of credit unions, calling instead for a “level playing field” between banks and credit unions. Banker testimony was provided by VBA President Chris D’Elia, Peoples Trust Company President Tom Gallagher and Bank of Orwell retired President Mark Young, the league reported.
Among other points, the banker message conveyed the following:
- “Non-tax-paying credit unions” are banks’ main competition.
- Every time a dollar is deposited in a credit union, state government loses tax revenue.
- Credit unions “pilfer” banks’ best customers, taking deposits that are needed to make loans.
- Credit unions send “customers” they don’t want to banks.
- The “playing field” between banks and credit unions should be leveled by applying the bank franchise tax to both.
- When products and services are similar and the original intent of credit unions is not being met, credit unions should not be left off the hook.
The VBA also announced distribution of a study it had commissioned to substantiate that the “tax subsidy” of Vermont credit unions is no longer appropriate based upon their service to low-income areas being less than that of taxed banks.
The league said it moved quickly. AVCU President Joe Bergeron issued an immediate call to Vermont credit union leaders for letters to Ways & Means members, citing the many differences between credit unions and banks. In addition, committee members received communications from Bergeron citing the misrepresentations of credit unions portrayed in the banker study, along with an abbreviated version of AVCU’s point-by-point response.
The league said that by Thursday credit unions were “prominently on display in the Statehouse” throughout the day.
“Just down the hall from the Ways & Means Committee meeting room AVCU staff manned a credit union display featuring several videos showcasing the differences between banks and credit unions,” the league said. “Numerous legislators stopped by to convey their favor for credit unions or to inquire for more detail. Later that afternoon, credit union leaders from around the state convened to hear from legislative leaders, followed by AVCU’s annual Legislator Appreciation Reception.”
By the close of business Thursday the House Ways & Means Committee members had moved the bank franchise tax issue without it applying to credit unions, the league reported. The committee’s recommendation for an increase of the bank franchise tax on banks over $750 million in assets now goes to the House floor and then on to the Senate.