Wednesday 11 April 2012

Osbourne's war on (real) charities

The government's latest attempt to make people of every political persuasion despise them is to dissuade the rich from giving to charity. The current situation, as the BBC describes it, is this...

When higher rate taxpayers donate money to charity, some of the tax can be reclaimed. Effectively they could pay no tax at all, if they choose to give away their income to charities.

This is a very good thing as it encourages charitable giving and the nebulous 'Big Society' that David Cameron claims to support.

But Mr Osborne announced in the Budget that from April 2013 the maximum amount that will be able to be reclaimed in tax relief - including on charitable giving - is £50,000 or 25% of the individual's income, whichever is the greater.

£50,000 is a pittance to some of these donors. You will probably recall that Warren Buffet and several other US billionaires gave away half their fortune to charity recently. Although Buffet has been known to complain that taxes are too low in America, it is notable that he chose not to give his money to the state, but to charities whom he thought - almost certainly correctly - would spend it more prudently.

One of the main reasons why Americans give much, much more to charity than any other country is that they enjoy tax benefits from doing so. But, as the Chief Executive of the Charities Aid Foundation points out, this is not a tax dodge. It is genuine philanthropy.

“This is not a ploy to save tax. Philanthropists who make large donations give away far, far more than they could ever claim in tax relief. That money goes to fund projects for the public good, such as medical research and help for the most vulnerable in society.

The killer line came from the "prime minister's spokesman" who delivered this doozy...

"In certain instances they may be giving to charities and those charities don't, in all cases, do a great deal of charitable work."

I certainly agree that there are plenty of charities who do not do a great deal of charitable work. Indeed, there are many charities that seem to do nothing but lobby for legislation, and, furthermore, these charities are funded by the government. That is an issue for the Charity Commission. If that Commission had not been snoozing under the stewardship of Suzi Leather for the last eight years, it might have encouraged some test cases against some of the many pressure groups masquerading as charities which have an undue influence on politics in contravention of charity law.

"We cannot be in a situation where very wealthy individuals are able to wipe out their bills by using these reliefs."

They're not profiting from it, asshole. Whomever they give their money to, donating funds to a third party is unambiguously an act of charity, whereas the state giving taxpayers' money to charity is an act of political patronage. These people are choosing to finance your precious Big Society rather than pay for the state's bureaucracy - a bureaucracy which gives £12 billion a year to charities in any case, including to such organisations as Action on Smoking and Health, the School Food Trust, the Equality Challenge Unit, Alcohol Concern and all the other fake charities that no one would donate to if they had a choice.

You want to remove tax status from organisations which do not do "a great deal of charitable work"? Fine. Start with the fake charity behemoth which Labour created and which you continue to feed. The third sector and the public sector are already inter-changeable much of the time. Let's deal with that rather than impoverishing real charities.


Mr A said...

Such is my hatred for ASH et al that the very word "charity" instantly puts me in an aggressive, anti-charity stance. The word has become synonymous with waste, coercion, corruption and social engineering.

I feel sorry for the real charities who have to scrape pennies in an environment that has created such knee-jerk loathing and distrust.

Anonymous said...

Philanthropy is a means of giving money away and retaining control over it. The rich don't want to pay taxes because they don't get to decide how the money is used, but a charity donation implies some control over where the money is going. Does this reflect the concerns and social conscience of the rich? No it reflects the fact that they don't want "their" money going to people they don't think deserve it.

Suboptimal Planet said...

Excellent post.

In my view the government shouldn't be deciding what counts as charity (as in so many areas, they've shown they can't be trusted).

From a legal and tax perspective, there should be no distinction between charities and corporations. Corporation Tax should be abolished.

Ideally we'd abolish income tax too.

David C said...

Gift aid should be abolished. It has been turned into a bureaucratic nightmare where transactions have to be manually entered onto a government website. It costs a fortune for charities to claim it and doubtless the government has spent millions more on computer systems and inspectors. It would be interesting to see how much of the tax allowance is swallowed up by admin costs - in the case of smaller amounts my guess would be almost all of it.
The extension of the allowance to amounts under £500 in 2000 was a typical Brown initiative, vastly increasing bureaucratic overheads and costs, of which he never seemed to have the faintest notion.

David C said...

I could also give chapter and verse about non-taxpaying little old ladies who have given large sums to charity, signed the gift aid form without realising it was inappropriate to them, and then been threatened with the courts by the revenue to recover the gift aid.

Ivan D said...

It is a shame that charity is increasingly a dirty word in the UK thanks to politicians wasting our tax on things that we clearly do not wish to pay for voluntarily. The system is completely corrupt as is the civil service that drives it. By the sounds of it we could end up with a situation whereby tax relief is only available to those who support "approved" charities, which I assume will include the likes of ASH and other rent seekers beloved of the odious DH.

Anonymous said...

David C

I work for a local charity, a childrens hospice,voluntarily, we do gift aid, we certainly don't coherse little old ladies into signing up, we explain the procedure fully and I have never heard of anyone being threatened with court by HMR to recover any monies.

Anonymous said...

I never give to any charity that receives Government money, they already have mine taken by force from my taxes. I give to local charities, Hospices and Lifeboats. I used to give to cancer charities but no more and I have had cancer myself, not that they were much help then anyway.