THE?LOCAL?CREDIT?UNION?MOVEMENT is not prepared to accept Government’s decision to remove the tax allowances for savings in credit unions.
A lobby will be launched soon to have Minister of Finance Chris Sinckler review the decision that was passed in the House of Assembly last week, ending a decades-long tax incentive to promote growth in the credit union movement.
However, the country’s commercial banks say they are looking forward to competing with credit unions on a more “level playing field”.
Steve Belle, general manager of the City of Bridgetown Co-operative Credit Union, insisted that the measure, which is expected to save Government $9 million, would result in lower savings by credit union members and weaker institutions.
“This measure will ultimately mean less profitable credit unions. The fact is that credit unions fund major income-earning [projects] through their savings and the majority of savings in credit unions happen during October to December . . . this measure removes that incentive,” Belle told BARBADOS BUSINESS AUTHORITY.
“When savings decline . . . then we cannot lend at the rate that we used to. We also have to absorb the increase in VAT so ultimately it means less profitable institutions.
Belle, who heads the island’s second-largest credit union, said they would launch a lobby to have Government review its decision on the tax incentive.
“We have to lobby, we cannot allow the issue to drop.”
Meanwhile, Barbados Bankers’ Association president Robert Le Hunte said, “Credit unions have done a tremendous job to improve their products and services but I think the incentives are no longer necessary to get people to save with the credit union.
“People who stay with the credit union will do so for the products and services and not the incentives. All businesses in their formative years need protection but at some point they have to move on.”
He pointed out that such tax incentives had been removed in other Caribbean countries, including Trinidad and Tobago. (GE)
