I agree with Nick – and with Vince!

 

I thought this government was going to extend our civil liberties. They made a good start, removing the threat of compulsory ID cards, and changing detention without trial. I have no wish for them to increase the surveillance of the state, and hope Mr Clegg wins his battle over the latest database issue.

Nor do I think it a good idea to cut the tax relief available for charitable giving. As I wrote on 8th April here, that policy is at variance with the Big Society idea.  The Treasury needs to grasp that large donors to charities do not make money themselves out of the gift – they are just being generous. The charity gets the extra advantage from the tax break.

I was surprised to hear Vince Cable say he did not want this proposal. Not because I expect Vince to keep to collective responsibility and defend the government, but because I thought the limitation of total tax relief available to the rich was a Lib Dem idea brought into the budget.

As I have been trying to point out for some time, one person’s tax avoidance is another person’s rational tax planning, is the government’s encouragement to better behaviour. A lot of tax avoidance has a moral purpose – to give money to charity, to save for retirement so you are not a charge on the state in old age, to save for a  rainy day to avoid benefit claims or to set up an enterprise which may have a wider social purpose. That is why governments of all persuasions offer a series of tax breaks, and why many people take advantage of them.

The charity break is perhaps the most altruistic. It is certainly the one with no benefit to the donor, other than a feeling of doing good. I am not surprised that a campaign is building up to change this proposal. I am glad the Prime Minister has said this is a consultation, and they are listening carefully.

The truth is simple. All the time the state spends so much more than its normal level of  income there will be stresses and strains trying to collect more. The government  has discovered that a few very rich people happen to be very generous to larger charities. They have eyed this money, as being an easy way to raise more tax. They are discovering it is not as easy as they thought. It comes down to a simple question – is what a Cancer or disability charity doing more valuable work than the government? Many people think so. They would prefer the rich person to give their money to the charity rather than giving it to the state. It can’t go to both. Parliament has to make a choice.

The sad truth is that even if the state took all the donated cash instead of charities, there would still be a huge gap between state spending and state revenues. This a very simple question – should the state get the money or should a charity – either way the rich person gives it away. How you answer such a question will say something about what sort of society you want to live in.  Should a rich person be made to give more to the state, or encouraged to give more to a good cause by offering tax relief to the charity?

140 Comments

  1. Mike Stallard
    April 14, 2012

    “They have eyed this money, as being an easy way to raise more tax. ”
    Actually I am not sure you are looking in the right place.
    The politicians are beginning to appear as shadow figures dancing to the tune of the Civil Service.
    I have personal proof of this over the Free Schools fiasco. But now other people (Charles Moore no less) in the Spectator and Telegraph are beginning to mention it too. I am beginning to suspect that the real people who need taming are in fact the invisible masses of unaccountable and very powerful bureaucrats who have very Blairite views. Sort of like the BBC.
    Am I right though! It is, like the EU, so very secret.

    1. lifelogic
      April 14, 2012

      I have always tended to view Charles Moore as having big state BBC type of views under a thin veneer especially of late.

      1. lifelogic
        April 14, 2012

        I see that the BBC have finally advertised for a new DG. In view of the current trustees of the BBC (and its current output and visible staff) it goes without saying that they want a politically correct, big tax, big government, ever dumbed down, fake green, pro EU, sustainable, diversity, loony feminist and equality encouraging (regardless of talent), non judgemental, lefty (thought this is not actually stated in the advert) they just use the shorthand “Understanding of the values underpinning the BBC”.

        They also say they want a “compelling communicator” presumable someone like Cameron who can endlessly argue that black is white and with a straight face. Personally I would prefer a bad communicator with integrity, efficiency and a good sense of direction.

        They do not mention a salary, but I would have thought £100K tops was plenty myself for such a person especially in Salford? where it will buy a house every year? (also having seen the dire quality of the last few incumbents).

        Their first task should be to make sure no one else at the BBC is paid more than they are or paid through “service” companies. After all, countless quality people would work at the BBC for nothing. This especially if the BBC had less of a loony, left agenda and just made good programs.

        It also says rather oddly “The Director-General will need to make sure the BBC always holds the trust of the people who pay for it throughout the UK” I assume they mean “regain the trust” then again as the public have to pay anyway (under threat of prison) why bother (this it seems is their current strategy)?

        https://careers.bbc.co.uk/fe/tpl_bbc01.asp?newms=jj&id=43231&aid=10281

    2. Nick
      April 14, 2012

      Ask why they are going to such extraordinary lengths to raise the cash?

      The simple answer is that they are bust.

    3. Rebecca Hanson
      April 14, 2012

      “I am beginning to suspect that the real people who need taming are in fact the invisible masses of unaccountable and very powerful bureaucrats who have very Blairite views.”

      Bunkum Mike. The problem here is Michael Gove’s ignorance and arrogance.

      He’s still very clearly obsessed with this ludicrous idea that all schools will generated the results Mossbourne Academy gets if only they follow free market policy and get kids to say mantras at the beginning and end of every lesson.

      He still will not look at the reality that Mossbourne’s results are generated through it having incredible resources, ludicrous funding levels which is will not reveal despite all pressure but which clearly lead to it having numbers of staff which other schools cannot imagine (just look at its job adverts) and the ability to sort out accusations that its GCSE results are due to extreme hot-housing which negatively impacts on A-level results by having it’s own elite rowing program which is open to the students form other schools who get the best results in London at their GCSEs.

      There never was any coherent argument as to how free market policies would improve results or evidence to suggest that they do. And of course mantras work because you get rid of the kids who are unsettled and wont say them at the beginning of the lesson. But they only work if you have loads of free staff to mop up those kids and deal with them effectively or the will and opportunity to exclude lots of children.

      This is Michael Gove’s ignorance and arrogance Mike. Stop pretending otherwise. Why are you doing that? This is a very serious problem which needs to be addressed and you are distracting attention from that.

      John when I saw this headline I thought you meant Nick Gibb and I was really worried!

      1. Mike Stallard
        April 14, 2012

        I think I prefer the longer hair as on linked in, actually. But I must say, the shorter cut for this profile is also very attractive too.
        I still wish I could remember the name of that Comprehensive, I keep wanting to say “Ladbrook Grove” for some reason.

        1. Rebecca Hanson
          April 15, 2012

          Yikes – I have a picture! How did that happen :/

          I can’t afford contact lenses any more and long hair and glasses didn’t work. Thank you for the compliment Mike 🙂

          I think charitable donations should be tax free by the way. Both charitable donations and tax are forms of taking responsibility for society and the should operate to the best extent we can mange to respect each other in the way they operated.

  2. colliemum
    April 14, 2012

    I am very ambivalent about this charity tax relief. It looks to me as if we, who are not rich but do pay our taxes, are meant to be really grateful and full of admiration that the rich are giving away large sums – while at the same time enjoying the opportunity to be more ‘tax efficient’.
    I feel this is somewhat dubious because the rest of us do give as we can, with the charity we give to enjoying getting an extra amount through gift aid, coming from the state.
    IAW, this tax relief goes to the charity but has no influence on the taxes we pay.
    Why should the rich not ‘enjoy’ this gift aid, where the charity gets a bit extra, but the amount of tax the rich pay remains the same?

    Sorry, I am not a tax specialist, but I happen to think that taxes should be clear, should be low, and that low taxation on incomes from whatever source obviates the shenanigans the very rich utilise to reduce the amount of taxes they pay.

    While we’re at it, a very much closer look at charities, at how much of the money they get from us actually goes to helping those whose cause they sponsor – and how much is being paid to their executives, admin, and PR.
    I think both the government who actually gives them money from our taxes, and also the rich who give such large amounts ought to be interested in such investigations.

    1. Nick
      April 14, 2012

      It’s not about tax efficiency. It’s all about getting the greatest bang for your donation.

    2. lifelogic
      April 14, 2012

      You say: “I happen to think that taxes should be clear, should be low, and that low taxation on incomes, from whatever source, obviates the shenanigans the very rich utilise to reduce the amount of taxes they pay.”

      It also get rid of all the pointless jobs in HMRC and tax lawyers, accountants, trustees, offshore company managers and all the rest and releases them to do something rather more useful instead.

    3. Mark
      April 14, 2012

      I’d take a close look at government spending on charities as a starting point. Much of it goes to lobby the government to change laws – i.e. advertising campaigns for changes they wish to make. Some of it finds its way into political donations. By definition, the spending is not what the public have chosen for themselves, but rather the choices made by ministers and civil servants, who now wish to exert even more control over charities by reducing their independent funding.

  3. Paul Danon
    April 14, 2012

    Let the charities have their reliefs back, but let’s also reform them. Government shouldn’t use charities as delivery-agencies, and charities should only help people, not lobby. With the sector purged of quangoism and lobbyists, it could become the principal provider of social care, if not also education and health.

    1. lifelogic
      April 14, 2012

      Agree charities have often become almost government indoctrination organisations – just look at the green issue as an example.

  4. MickC
    April 14, 2012

    “a lot of tax avoidance has a moral purpose”-this is entirely and utterly wrong.

    ALL of tax avoidance has a moral purpose; that purpose is that the citizen can keep his own money to look after himself and his family-this is the most moral purpose there is. It also serves the moral purpose of creating self-reliance and responsibility-as well as promoting freedom.

    Tax is, by the very nature of it being compulsory and enforced by state penal sanctions, an evil and a curtailment of freedom. Most of us accept that it is a necessary evil because the money raised is used for the “common good” (itself a subjective concept) such as defence, a justice system, basic healthcare, etc.. But let us not forget that the taking of money with menaces, no matter that the intention is “good”, is itself an ill.

    Tax avoidance is not “morally repugnant” as Osborne said. It is the state theft of the individuals propertythat is morally repugnant.

    1. lifelogic
      April 14, 2012

      Indeed beyond the provision of defence, law and order and basic services, it is over tax borrow and waste that is “morally repugnant”. Any true Tory knows that just a shame there are so few in the Tory party.

      1. Bazman
        April 14, 2012

        Law and order might become a bit more expensive with your tax regime. Very expensive. Either way you would have to pay. I mean would everyone just lie down and take a massive hit in living standards? They would get a job ids your fantasy. They would do some work for sure, but not what you have in mind.

        1. lifelogic
          April 14, 2012

          If they had to work they would have less time for crime and would develop some proper standards and dignity perhaps.

          1. Bazman
            April 15, 2012

            Middle class fantasy. lifelogic. There would be less work and more unemployed. There would be a massive drop in living standards due to the shrinking of the economy. Private enterprise would never be able to take up the slack and though not acceptable to many benefits paid to the claimants all gets spent not put in the bank. This alone must support the supermarkets and utility companies.

          2. uanime5
            April 15, 2012

            Unfortunately in real life there isn’t enough work available for everyone in the UK. So at present 2.7 million people have enough time for crime.

            Also it’s possible to commit crimes after or during working hours.

        2. MickC
          April 15, 2012

          Why would there be a massive hit in living standards?

          1. uanime5
            April 15, 2012

            Well if benefits are removed then you either work or live in a shanty town; and if you’re born in a shanty town where everyone is unemployed you’re not likely to get a job.

    2. libertarian
      April 14, 2012

      Exactly right

    3. nicol sinclair
      April 14, 2012

      @MickC. I could not agree with you more. Had you not already made the post, I would have done so in a similar vein. However, being in the Nepali time zone (4.45 hours ahead of BST – yes 0.45 ahead of India because the Nepalis have no love lost for the Indians!) for me causes the timings of JR’s excellent blogs to be out of sync with the rest of the civilised world… ‘Blin’ as I would say in Russian slang.

      1. Bazman
        April 14, 2012

        I bet the peasants work so hard and are happy with the tax system in Nepal nicol? Know their place there do they?

    4. uanime5
      April 14, 2012

      I noticed that you didn’t mention education or social workers in you list of acceptable things to spend tax money on. An oversight I take it.

      1. Bob
        April 14, 2012

        @uanime5
        In large part it is because of the low educational standards in state schools that we need social workers.

        1. uanime5
          April 15, 2012

          I though we needed social workers because parent’s didn’t know how to raise their children. It’s not the fault of teachers that most people don’t know how to raise children.

          1. Bob
            April 16, 2012

            @uanime5
            The parents are victims of the state education system too, and the children no longer look to their parents for support and guidance, they look to the state now.

            And that my friend is why we’re in the state we’re in.

      2. lifelogic
        April 14, 2012

        I refer to “basic services” most should pay for their own education but some education and even social services is clearly needed.

        1. Bazman
          April 15, 2012

          Basic service like law and order and a stable society?

  5. lifelogic
    April 14, 2012

    Most tax avoidance certainly has a moral purpose, namely to prevent the government wasting money and use to it better ones self (use better by a factor of 10+ is not hard since much state expenditure actually produces positive harm). Perhaps the best way forward for the government would be to show (as charities have to in order to raise funding) that they spend wisely and efficiently. The have singularly failed in this.

    They could address this by stopping transfers to the feckless stopping the PV and windmill bling subsidies, the Olympics waste, the counter productive wars, the carbon capture and the green bank nonsense, forcing children to speak Welsh to 16 and all the countless other indoctrination and other nonsenses, gift to the PIGIS and the EU, sort out the dis-functional NHS, justice, legal and education/indoctrination systems.

    If they did this, and got rates down to sensible levels circa 20%. Then people might pay their taxes with true joy in their hearts. Knowing what an efficient and sensible state sector they have providing the essential good & useful services to all.

    1. lifelogic
      April 14, 2012

      The solution on charities is to make sure the tax relief goes only to sound & honest charities, regulated in the UK, and doing good works with the majority of their funds. I am not sure I would include some of the political “think tanks” and some education and religious charities within this definition.

      1. lifelogic
        April 14, 2012

        I now see, in the FT today, that this GAAR (general anti abuse rule) might even include interest deductions from income tax. So the government now want to tax profits that have not even been made it seems. For example Income in:- £400K interest out:- £400K profit/income:- nil. But taxed raised on an income of £300K. I assume you will be expected to borrow the tax bill from the non lending banks and that the interest on that new loan will also not be allowable the following year.

        It is hard to underestimate the uncertainty and damage this will cause to industry. It is totally insane. Does Osborne have a clue what he is doing?

        Do you know any more JR?

        This uncertainty surely need resolving clearly and quickly or it will be hugely damaging to investment and further affect the willingness of banks to lend at all – they will not sure if interest on any loans (new or existing) will be tax allowable for the borrower.

        1. Bazman
          April 14, 2012

          All of the above tax avoidance reasons given above is just like saying that payments to single mothers should be stopped and the money spend on something useful like better road surfaces. If the wealth gap of this country is allowed to become so large as it has over the last three decades to social adhesion of the country will be threatened. The middle classes have in fact been the biggest losers seeing their income decline by a massive amount. You are living in a dream world if you think that the lower levels of society will just sit back and accept ever lower levels of living standards whilst the rich grow ever richer often with no effort from themselves. Why should they. As I keep pointing out the British peasant living off the land is a fantasy and private enterprise does not seem to be able to take up the slack and not because of your tax/regulation fantasies, which would in effect create even greater wealth divides. If you want to live in a every man for himself country, then move abroad to your great capitalist countries. Your fat pasty middle class faces would not last five minutes.
          Tax whether you like it or not is what keeps this country stable. What do you think would be the result of a stoppage of all benefits and healthcare? I assume you think it would be morally right to rob and steal for your family as it must be as it would not be morally right to watch them starve would it. Get a job? What surgeon or actor?

          1. lifelogic
            April 14, 2012

            You say “Tax whether you like it or not is what keeps this country stable” rubbish it is tax and redistribution to the feckless which makes it such a mess.

            I have not suggested stopping all benefits or healthcare – just charging, all who can afford to pay something, and making benefits subject to being genuinely unable to work or on doing some voluntary works.

          2. Bazman
            April 15, 2012

            Like I say. You are living in a dream world. A nice middle class society where everyone just gets on with it. Of course helped by the middle class social security system. Stop all benefits and nothing would happen? Silly and childish, but a dangerous propaganda on par with your BBC brainwashing sermons.

        2. BobE
          April 14, 2012

          Off topic but have you seen how the EU law change to equlise Men and Womens pensions will cause the mans annuity rate to fall to be in line with the womans rate.
          So a new Male pension bought by an annuity will fall by 13% from December 2012.
          EU equalises Men and Womens pension rights. (Downwards of course).

          1. lifelogic
            April 14, 2012

            Indeed total insanity for Cameron and the EU.

          2. Bazman
            April 14, 2012

            Off (your topic Bob) Could you answer the above?

        3. sm
          April 15, 2012

          Re: Interest deductability.

          Is not BTL part of the problem not the solution

          Personally, bank loans and interest deductions for tax should be limited on old builds, to a prudent multiple of the net rental yield.

          On new builds, BTL should be encouraged but only for a limited period say 10 years.

          It depends on why the loan was put in place? Its seems quite close to thin capitalization rules.

          Just look at how Australia handles tax (and other matters), you will find it difficult to put a loan in post purchase and get a tax deduction.

          Still with QE and ZIRP and continuing 250k migration pa , property interests should not feel too hard done by. If some are in need of tax susbsidies and infrastructure spend then the taxpayer is inbetween a rock and a hardplace.

          I am just waiting for when an internet company sets up companies for (microrents) to avoid paye/nic for the ordinary paid worker.
          I bet that would result in an immediate change on the laws, most likely retrospective as well. The tax industry/tax levels have made it unavoidable, whilst the government evades its responsibilites to one sovereign nation.

      2. Susan
        April 14, 2012

        lifelogic,

        I think Mr. Cameron mentioned the possibility of treating UK charities differently from those abroad had been considered, but apparently this may break EU law.

    2. nicol sinclair
      April 14, 2012

      @Lifelogic. Ditto to my comment above – if it survives ‘moderation’

    3. uanime5
      April 14, 2012

      Why would someone who avoids all their tax want to pay 20% tax?

      1. lifelogic
        April 14, 2012

        Because avoiding 20% would be more trouble than it was worth. Also most would think 20% was fair and reasonable perhaps.

        1. uanime5
          April 15, 2012

          Utter rubbish. If people thought 20% was fair then they would be avoiding all but 20% of their taxes. People pay 0% taxes because they consider 0% to be fair and reasonable.

          1. lifelogic
            April 17, 2012

            Utter rubbish it might be more trouble than it is worth to save the 20%. The tax saving schemes do cost money in time, risks and fees you know often more than the 20%.

  6. A.Sedgwick
    April 14, 2012

    The truth is simple – Cameron and Osborne do not know what they are doing.

    1. nicol sinclair
      April 14, 2012

      Yes, they have misread the public’s reaction. Who are the public? The Big Society that WE belong to.

  7. David Ford
    April 14, 2012

    Brilliant piece, very well done.

    David Ford

  8. Steven Granger
    April 14, 2012

    Regarding your first paragraph, the proposals that you refer to are merely the government preparing us for legislation that they know is coming from Brussels. Yet again, a Tory party claiming to be Eurosceptic in reality slavishly following the dictats of our masters in Brussels. Yet again no mention of this from you. You know full well that Clegg will not win his “battle” and that the Lib Dims will eventually support this legislation, since they are even more pro-EU than the Tories (but only slightly so).

    1. nicol sinclair
      April 14, 2012

      Agreed.

  9. Andy Man
    April 14, 2012

    So Dave and George are more left wing than Nick and Vince.
    Not really a surprise given the policies they have been pursuing.
    If only we had a few Conservatives in government.

    1. Susan
      April 14, 2012

      Andy Man,

      I suspect Nick and Vince are more worried about how the charity cap will effect University funding than they are about whether the policy is fair or not. After all this will really put them and their party in a poor light after all the trouble they have had over University funding etc. I think their interest is political rather than about whether it is fair that the wealthy can avoid tax through charities.

  10. Boudicca
    April 14, 2012

    The Government’s surveillance proposals are driven by the EU – as John probably very well knows. If he doesn’t the following report by Open Europe will explain it: How the EU is Watching You – the Rise of the European Surveillance State http://www.openeurope.org.uk/Content/Documents/PDFs/howtheeuiswatchingyou.pdf

    Cameron is going to have to back down over tax/charitable giving; the proposal is completely at odds with his aim of building a ‘Big Society.’ The fact is, we are already overtaxed and trying to load more on us is going to be resisted (wealthy or not). The Government spends too much and is going to have to actually cut it. It would do well to start with the Quangos and the legions of politicians and their hangers-on that we don’t really need.

    In the 1960s we were governed by:

    Westminster Parliament (650 MPs – about 800 Lords)
    A few Quangos
    The County Councils
    Distict/Local Authorites
    Parish Councils

    Now our Government consists of:

    The EU: MEPs, Kommissars, Eurocrats (we are the second largest net contributor) @ £50million+ a day)
    Westminster – 650 MPs over 1000 Lords
    The Scottish Government
    The Welsh Assembly
    The NI Assembly
    Quangos (957 costing us £82 billion a year according to Tax Payers Alliance)
    County Councils
    Unitary Authorities
    District / Local Authorites
    Parish Councils

    We are overgoverned. The Government should start cutting back by getting out of the EU and running our own country. Why should WE pay for the legions of overpaid fat-cat EU-personnel to run Europe.

    1. Nick
      April 14, 2012

      You’ve forgotten the Mayors

    2. Martyn
      April 14, 2012

      What a cracking summary of then and now! But get out of the EU? Not a hope in Hell with the present Prime Minister – here, (http://www.youtube.com/watchfeature=player_embedded&v=i1JReyGsdOA) in 2009 he tells us as it is with the Lisbon treaty and declares that there must be a referendum on our membership. Of course, back then he was PM in waiting…

      Ho! Ho! Now that he is in power he has joined the others and actively embeds the UK ever further into the EU maw. Not one member of the government has the courage to tell us that there is nothing they can do when the EU takes on another area of ‘EU competence’. Far from being democratic, the EU to me more and more resembles a Fascist organisation or, if not quite that certainly a dictatorial and almost completely undemocratic and it beggars belief that a succession of governments can so easily subordinate us to is.

      1. stred
        April 16, 2012

        No longer available on U Tube. Who took it off?

    3. lifelogic
      April 14, 2012

      Indeed but government is like a malignant tumour fast growing, self replicating & very hard to kill – without first killing the patient.

      1. Bazman
        April 16, 2012

        You just come out with it don’t you?

    4. nicol sinclair
      April 14, 2012

      Oh, how I agree with you. I didn’t realise it is quite so bad now. Thanks.

      Cameron & Osborne need to realise that there is a HUGE backlash against them. Do come out of the ‘bubble’ and talk to us – in my case in Nepal. BTW, how much of our tax (aid) money has Cameron promised the Burmese Junta?

      Where is the referendum on Europe?
      Where are the cuts in the useless, expensive Qangos (or Quangos ‘u after q’) ?
      Where are the cuts in public spending?
      Where are the incentives to SMEs to grow & save the country?
      In my opinion, I have seen little of the promises previously made. If it’s the Limpdems who are in the way, dump them and go Tory………
      Or is it power and the Ministerial limo that you’re all after.

      Best regards,

      A frustrated Unionist Scot, who is seriously fed up up with politicians of all hues.

    5. sjb
      April 14, 2012

      Boudicca wrote: The Government’s surveillance proposals are driven by the EU […]

      But “[…] the UK’s DNA database, which is five times larger than the EU average” [1] and a Police Foundation report of 2009 claimed: “[…] British citizens [are] the most surveilled people in the world.” [2]

      Are you sure you have correctly identified the driver?

      [1] see p6 of the report cited by Boudicca.
      [2] http://www.police-foundation.org.uk/files/POLICE0001/publications/Briefings/Briefing%20CCTV%20FINAL.pdf

  11. James
    April 14, 2012

    “It comes down to a simple question – is what a Cancer or disability charity doing more valuable work than the government?”

    But it’s not that simple. You could turn it around and say ‘Is spending on the police/NHS/defence less important than spending on a geopolitical think tank or butterfly conservation’

    1. lifelogic
      April 14, 2012

      The difference is with charitable donations you have a choice. If you like butterflies or cancer research you donate accordingly or not as you wish. With the government you get one vote every five years, on all the countless issues, and which has no real power at all and you have to pay anyway under threat of imprisonment.

      1. lifelogic
        April 14, 2012

        You even have to pay for things you actively disapprove of like buying votes, counter productive wars and all the quack green nonsense.

        1. Bazman
          April 14, 2012

          How about anti pollution laws like conservation of water supplies and disposal/minimisation of electronic waste? Is this all just quackery?

          1. lifelogic
            April 14, 2012

            Mostly yes the water goes into the sea eventually, either after use or directly after all. What is it being conserved for? We just need to charge for it and make the right provision?

          2. Bazman
            April 15, 2012

            It’s the bit before the sea that is the problem. What about pollution of the supply by farming and the vast amount of electronic waste generated by this country. How about a ‘sensible’ answer instead of your quackery and preaching of paying. I mean why have clean water supplies anyway? Just drink bottled water is about the level of your comment and comments.

          3. lifelogic
            April 17, 2012

            Bazman,

            I would certainly never waste my money on bottled water in the Uk or lottery tickets. Why would anyone?

      2. Barry
        April 14, 2012

        There is the matter of the providing any tax refund which effectively comes out of all taxpayers contributions… In other words, there is no choice for the taxpayer having to supply the funding for those charitable donations that attract tax relief. This choice is limited and one sided.

        1. lifelogic
          April 17, 2012

          Wrong – it does not come out of every bodies tax contributions it belong to the donor who has earned it and is now giving it to charity for the general good. The higher earning person is almost certainly paying far more to the state already then they ever get useful services.

  12. Brian Tomkinson
    April 14, 2012

    How embarrassing it must be to be a Conservative MP or councillor having to support such an incompetent government. I have lost count of the number of ill-thought out proposals they have come up with in less than 2 years in office. In May many of your councillors are going to pay the price for being associated with this poor performing government. It won’t directly have been their fault but, as politicians like to tell us, real change comes from the bottom up and they are at the bottom of the overall government pile. When the poor results are announced Cameron will draw the wrong conclusion and, if the rot is not to be perpetuated, you Conservative MPs will have to exert what little influence you have or your fates will be sealed also.

    1. Nick
      April 14, 2012

      If they keep voting for the policies then they agree with the policies.

  13. A David H
    April 14, 2012

    If you Google “Smith Institute political charity” you may find that not all “charities” are what you might think. However, that should not be a problem if “charity” were properly defined and policed. Were they? Are they? If not, why not?

    1. lifelogic
      April 17, 2012

      Indeed they should be properly defined and policed. Anything (connected with socialism-ed) is clearly likely to be steeped in stoking up the politics of envy.

  14. alexmews
    April 14, 2012

    excellent post. thanks John.

    I think this line from the government, first Mr Osborne now the others, is PR triangulation gone amok. i cannot see how any rational Tory, never mind anyone else, objecting as you say to charitable donations being tax deductible. The allegation was that perhaps some unnamed citizens had set up offshaore charities and were therefore in effect making charitable donations to themsleves. Scurrilously allegations were then made elsewhere that such vehicles may indeed be in use by some former and indeed current sitting MPs!

    Be that as it may – in some countries employing childcare is tax deductible. i am not suggesting that childcare should be considered a charity – just reafirming your view that the state encourages, thorugh the tax system, many different things including in this case – working mums. Good? Bad?

    Also – many fee paying schools are charitites. Why can’t i deduct fees?

    Inconsistencies and peculiarity abound!

    1. lifelogic
      April 14, 2012

      You ask: “Also – many fee paying schools are charities. Why can’t i deduct fees?”

      Because it is not a donation to the charity. You are buying a service for your children you get a benefit back from the charity.

      You should perhaps, arguably, get a refund from the state, who save the considerable cost of the education in the state sector over £100,000 from 5-18.

      1. wab
        April 14, 2012

        “You should perhaps, arguably, get a refund from the state”.

        Well with this logic then if you don’t have kids you should also get a refund.

        The bottom line is that you are in effect saying that people who do not use the State eduction system should not have to pay for it. Equivalently, you are saying that people should pay for the education of their own children.

        I think you might find this proposal to be a hard sell with the British public.

        1. lifelogic
          April 15, 2012

          Not really if you gave them all an education voucher to use as they wished for their children’s education.

  15. Bernard Otway
    April 14, 2012

    The state is a MONSTER that should have all it,s heads cut off ,ie like a Hydra,it needs
    absolute root and branch reform so that it occupies the LEAST possible part of the GDP of any country.I am only too glad that not long from now I shall be in a better place.As an aside
    i urge you all to read Frederick Forsyth in yesterday,s express commenting on Castro and Chavez,only thing is the repentance is far too late on their part.I hope the partakers and promoters of this monster start to look as uncomfortable as Castro does in his picture with the POPE. THEY ARE RESPONSIBLE,I hope the huge FIRES waiting concentrate what passes for their minds.

  16. MajorFrustration
    April 14, 2012

    This Government have lost it at so many levels and it will be no good, come the next election, saying “it was the LibDems that stopped us implementing our policies” Policies hardly seem thought thro, petty issues such as say gay marriage appear to take centre stage, bonefire of quagos and red tape have still to be ignited, immigration still “open doors” and benefits still a major drain on the economy – same old same old. And to make matters worse it looks as though if one is white and a christian then expect some ethnic cleansing

    1. zorro
      April 14, 2012

      I think that the word is superficial. The policies are superficial and not thought through or worked out in advance. They also need to U-turn when they are obviously so. As I have said before, they can blame the Lib Dems all they like, but if the Tories had obtained a majority, with Cameron in charge, noting would have been different in substance. They are too afraid to mention why they are bringing in these intrusive laws around the ability to snoop on the communications of everyone without due cause.road sooner than he thinks.

      zorro

      Cameron is gradually being found out by more and more people including those in the Tory Party…..He may well run out of

      1. zorro
        April 14, 2012

        bit of a time lag with the words!

  17. Leslie Singleton
    April 14, 2012

    To say there is “certainly” no benefit to the donor is OTT. Three benefits that come readily to mind are 1) More chance of a gong 2) Dinner at High Table with the Master 3) Dodgy arrangements, abroad most like, where the donor has an interest.

  18. Susan
    April 14, 2012

    This is something you must take up with the Chancellor and Mr Cameron then because they are saying that people are using charities to avoid tax. Therefore the public is being told two different things entirely and will not know what to believe.

    There is another question though, is it right for tax payers to have to stand behind charities not of their choosing but that of the wealthy person giving the money. The cap is still very generous, so I understand, and no one is telling rich people not to give to charity, so I really do not see the problem. Unless of course it is closing a loophole which the wealthy exploit.

    Tax avoidance such as ISA’s and pension contributions are encouraged by the Government for the purpose of less reliance on the state in old age and should not be confused with the agressive tax avoidance engaged in by the wealthy.

    However whatever the Government decide to do, it is now the in publics mind about tax avoidance by the wealthy, they may decide that being honest themselves does not pay. This undermines the tax system as more people will decide to avoid tax leading to tax evasion as has happened in other Countries.

    As to the big Society, as I have suggested before, I have not met anyone yet who really understands what this means. Therefore the Governments sound-bite is not coming across to the public.

  19. Bob
    April 14, 2012

    An excellent article and first rate comments.

    The story so far:
    A) Claim back our independence from Brussels
    B) Seriously cut back on government spending
    C) Significant reduction of taxation to allow the economy to recover
    D) Offshore charities should be closely scrutinised to qualify for tax deductions
    E) David Cameron and George Osborne are clueless
    F) The Tories have lost the plot

    So who should we vote for at the next election?

    1. nicol sinclair
      April 14, 2012

      Hear, hear!

  20. Neil Craig
    April 14, 2012

    Arithmetically money given in tax relief is bound increase the amount of money available to “the most vulnerable in society” & related good causes by more than, I would guesstimate about 3 times more, the amount the treasury gives up.

    Unless we assume that due to some extraordinary efficiency with which government spend money, their own spending is managed at least 3 times better than the average charity that means “savings” on tax relief to keep up government spending will have a negative effect on those receiving benefits.

    I accept that “the purpose of government spendinmg is to pay government employees and their friends & thye nominal purpose is secondary at best” which means that government is likely to be at least 3 times less efficient (I have previously shown that in the building arera it is 8 times less competent), rathyer than 3 times more.

    In which case, unless one accepts that the purpose of government really ought to be to pay civil servants there can be no intellectual for this proposal.

    1. lifelogic
      April 14, 2012

      You say “unless one accepts that the purpose of government really ought to be to pay civil servants” Pay and pension civil servants is alas exactly how the civil service and this government seem to see it.

  21. Mark
    April 14, 2012

    Government funding of charities amounted to £11.8bn in 2010/11. This is a similar amount to that given by private individuals. Government seems to be trying to say that it should decide which charities should be funded and by how much. That doesn’t make them charities any more, but quangos. The aid budget is already a massive government selected charity operation. We’d like to vote on what that does rather than have government do it for us.

    Most of us would consider that the definition of charitable purpose has been abused by the Charities Act 2008 (and the Scottish equivalent from 2005). Reform it, and get rid of the left wing think tank approving leadership of the Charities Commission and the OSCR.

    1. uanime5
      April 14, 2012

      Surely it’s been the right wing that ruined charities by having the the definition of charitable purpose expanded to include things that benefit the wealthy, such as public schools and tax avoidance.

      Reply: Who are the right wing in this fantasy and just when did they change the law?

      1. libertarian
        April 15, 2012

        More mouth frothing nonsense.

        The main public schools in my areas of the South East were all set up as charitable educational establishments in the 16th Century by Henry VIII. Long before the concept of tax was invented.

        In fact the ORIGINAL definition of a charity is EDUCATIONAL purposes. Most schools would actually be far better off not as charities but of course they were set up as this many 100’s of years ago and cannot change that now.

        As to your ludicrous assertion about tax avoidance. Currently according to the ISC charitable status public schools have £280 million of UNRECOVERABLE VAT paid to government each year. The ISC also calculates that the cost to the taxpayer of doing away with public schools would be between £3-4 billion per annum.

        There are NIL, ZERO, ZILCH NADDA NO tax benefits to paying school fees to a charitable public school. The fees are taxed as part of income BEFORE being paid to the school and are NOT tax deductible.

        You really are clueless uanime5

      2. uanime5
        April 15, 2012

        The ones Mark was referring to who apparently introduced the Charities Act 2008.

  22. Matthew
    April 14, 2012

    I never understood the “Big society”
    This debate, by looking at the issue from the inverse – has given me an idea of what it’s about.

  23. RDM
    April 14, 2012

    Well said John. Plain simple Truth!

    Regards,

    RDM.

  24. David John Wilson
    April 14, 2012

    While there should be a continuation of allowing charities to reclaim tax on donations there needs to be a considerable tightening up of which charities qualify for such relief. It should be limited to UK based charities that use the donations to benefit the poor and needy.

    Thus a large number of organisations like public schools should be relieved of their charitable status. Sports clubs and similar organisations should not be allowed to reduce their fees by members paying part or all of those fees as charitable donations. Thus any donation that attracts tax relief should not be allowed to have any benefit for the giver either directly or indirectly.

    1. outsider
      April 14, 2012

      So that’s the churches, the National Trust and the RSPB gone then.

      1. outsider
        April 14, 2012

        Guess that performing arts and medical research charities would be out too, along with charities supporting your local hospital.

        1. uanime5
          April 15, 2012

          Why is a charity supporting a public hospital? Surely the Government is the one paying for all the doctor, nurses, food, medicine, equipment, and everything else expect the private car park.

          Also why is a charity doing the same research as a multi-billion pound pharmaceutical company?

  25. stred
    April 14, 2012

    Donations to European charities may be somehow linked to the interests of the donor in countries which are not regulated or prone to fiddles. The same may happen here and some charities should never be accepted as such. Preumably the charities could not be verified by HMRC under EEC law and so exceptions could not be made.

    A major cancer charity has already had to stop all new research projects. Standby for more of the same.

    1. uanime5
      April 14, 2012

      I’m sure that the pharmaceutical industry will continue research into producing new anti-cancer drugs in order to earn billions from these new drugs. Remind me again why we need charities to do the work for multi-billion pound companies.

      1. libertarian
        April 15, 2012

        You don’t know what a Charity is do you uanime5 ?

        A charity is a NOT FOR PROFIT organisation that fulfils one of these criteria

        the prevention or relief of poverty
        the advancement of education
        the advancement of religion
        the advancement of health or the saving of lives
        the advancement of citizenship or community development
        the advancement of the arts, culture, heritage or science
        the advancement of amateur sport
        the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity
        the advancement of environmental protection or improvement
        the relief of those in need, by reason of youth, age, ill-health, disability, financial hardship or other disadvantage
        the advancement of animal welfare
        the promotion of the efficiency of the armed forces of the Crown or of the police, fire and rescue services or ambulance services

        The term CHARITY is a legal definition in terms of an organisations reporting behaviour and its tax treatment by HMRC.

        The tax relief on charitable DONATIONS ( gift aid)is given to the charity NOT the donor .

        If you are in a charitable payroll scheme your employers pay your donation to the charity BEFORE applying income tax to your earnings.

        A charity is perfectly able to charge for its services. as an example Barnadoes the children’s charity charges for its consulting and management work.

        Schools and hospitals that are charities charge fees to their users. None of these fees are donations and therefore are NOT tax deductible by either party.

        BUPA the health company that mostly provided healthcare in the UK prior to the establishment of the NHS in 1947 has a charitable trust which funds health care research and awards grants to organisations and individuals researching in the field of medicine, disease and health.

        Researchers don’t develop drugs, they do the research that may lead to drugs being developed to combat those illnesses. A reasearch companies status as a charity, NGO, Social enterprise, CIC or any other form of vehicle is totally irrelevant .

      2. stred
        April 16, 2012

        Because of the incredible cost of regulation and taxation, in medical research most new approaches in drug treatment cannot be financed privately on a commercial basis. This is why the major drug companies have moved research centresto China. Well trained staff and lower salaries are also a reason.

        In the UK, charities and the Medical Research Council fund many initial stages of promising drug research projects. The MRC has limited funds and only the very best are given backing. The charities have received funding from rich and less well off people who have suffered from diseases and wish to do something for the future.

        Charities and savers have been unable to increase funding from investments for the same reason. To add to their problems by limiting tax relief would not be helpful.

  26. merlin
    April 14, 2012

    I honestly thought that with the advent of the conservative/liberal coalition we would have less government interference, it appears that slowly but surely we are getting more. I have no problem with wealthy people giving tax deductable donations to worthwhile charities. I thought conservative meant a smaller state and a less government but as other contributors have pointed out the opposite seems to be happening, but I think we know why. The EU is operating behind the scenes. I still don’t understand why it is that when a government initiative is announced the government openly states that this is because european directive 13456 has to be obeyed, are they trying to hide something?

    1. zorro
      April 14, 2012

      Of course they are….their subervience to the interests of the EU which is their main raison d’etre along with feathering their own nest. That is of course when they are not earnestly trying to repatriate powers from the EU…hahahaha

      zorro

  27. Martin
    April 14, 2012

    Looks to me as though the super rich are essentially getting to decide where their taxes are spent under the guise of charity giving. The less well off just have to subscribe to whatever the powers that be decide.

  28. Electro-Kevin
    April 14, 2012

    The pharmaceuticals must make a lot of money from the results of research which has been funded by public donation.

    Perhaps this could be looked into.

  29. Terry Harris
    April 14, 2012

    On the face of it that sounds fair. Give your cash to charity and save the tax.

    However, I understand that the devious rich are circumventing the generosity of HMG by creating new charities, solely in their children’s names and avoiding any tax by paying into these ‘charities’ for the benefit of their own family, ONLY.

    That is obviously against the spirit of the idea and must be stopped. But to stop it for all charities is just an effrontery to the genuine philanthropists.
    Why cannot our Government actually think through a policy before launching it? Or is that what we should expect, when we have boys doing jobs made for men?

  30. Denis Cooper
    April 14, 2012

    On civil liberties, I have to accept that defeating terrorism, and in particular the (word left out) Islamic terrorism we now face, must take priority.

    As others have said there is already heavy EU involvement with the retention of data on private communications, which the government should openly admit and honestly explain and if possible justify.

    However if there was no EU, and the UK was making its own independent decisions on this, then I would take the view that our security forces must be able to detect, monitor, infiltrate and disrupt terrorist networks as they form and before they get to the point of perpetrating mass slaughter of innocent people – including innocent Muslims, of course – and if that means GCHQ having the capability to examine all electronic communications traffic then so be it.

    The problem, as we know, is that what starts out as specialised security units fighting terrorism to save life and limb ends up with some council official using the same powers to pull somebody up over putting their bin out on the wrong day, and setting up the mechanisms to prevent and if necessary punish that kind of abuse is where attention should be concentrated.

    1. zorro
      April 14, 2012

      Dennis, I think that you know better than that. The security services are perfectly capable of infiltrating groups/intercepting their communications with the legislation already in place (and even before then) when there was a real danger to the country……What they propose can be circumvented by their proposed targets and its true purpose is not in the long run to inconvenience them….

      Think about the amount of communications circulating around at any one moment. It will be impossible to keep track of this chain of data and they will only realistically be able to hone in on already identified targets in supposed real time.

      They are currently stating that they will only record the times of conversations, titles of e-mails, and will need a warrant to interfere with the content of the communications. That is legally correct…..but the technology exists already and has done for some time.

      zorro

    2. Bazman
      April 16, 2012

      Or using cameras to catch dog foulers. A very good and legitimate use for them.

  31. Derrick Wilkinson
    April 14, 2012

    If the the tax break on giving to charities “is one with no benefit to the donor, other than a feeling of doing good.”, how will its reduction change the behavior of the donors? They can feel just a good about their gift and make a contribution to general govt revenues.

    1. Susan
      April 14, 2012

      Derek wilkinson,

      Well said, my feelings exactly, after all we are all in this together.

  32. Barry
    April 14, 2012

    John
    It would be useful for a balanced argument supported by facts here rather than assertions such as “A lot of tax avoidance has a moral purpose “…. paying taxes also has a moral purpose and not paying taxes has a moral downside.
    Rather worryingly, the consequences of this topic appears to be that it is perfectly fine to give to charities rather than pay taxes. This argument presumably applies to all and not just the rich. The unintended consequences of such a general approach if all of us donated to charities rather than paying taxes would be the destruction of the Government supplied services that we all rely on (including the rich) but more likely the removal of tax benefits for charitable donations. The moral argument should be pay your fair share of taxes as a UK citizen AND give to charity according to your conscience (with or without tax relief).

    1. Bazman
      April 14, 2012

      As I have said. What next charity motorways?

      1. Susan
        April 14, 2012

        Bazman,

        That seems very probable the way things are going.

    2. lifelogic
      April 14, 2012

      Clear the government needs some taxes but for them to spent £5,000 per person is quite enough for all they need to provide. They currently waste over £10,000 per person which is clearly unsustainable & is killing the golden goose. Sooner, or later, they will have to make cuts.

  33. Denis Cooper
    April 14, 2012

    As a matter of principle I’m opposed to there being any tax relief on donations to “charities”.

    There should be a clear separation between the activities of the state, with its basis in law backed up by the threat of coercion, and those of voluntary organisations of citizens freely doing something that they want to do, because they believe it is a good thing that needs to be done, without the latter being gradually subsumed as arms of the former.

    The so-called “Big Society” idea is inimical to the idea of small government; rather it’s a manifestation of big government drifting towards totalitarianism, where all aspects of life are somehow under state control.

    First the citizen should render under Caesar that which is Caesar’s, by force of law; and thereafter he should be free as an individual to render unto God that which he believes to be God’s, without being able to force others to join him.

    I’m even more opposed to the idea that donations to political parties should be tax-deductible, a suggestion which is being increasingly floated by party politicians and often introduced with weasel words attempting to draw an analogy to charitable donations.

    1. zorro
      April 14, 2012

      Agreed.

      zorro

  34. nicol sinclair
    April 14, 2012

    Dear Mr Redwood,

    By now, you will have noticed the slant in this blog against the government. Please convey the sense to Messrs Cameron & Osborne. If they wish to have a chance of winning the next election, they will have to pull their socks up and deliver their promises from their manifesto…

    1. Bazman
      April 14, 2012

      Dear Mr Redwood,
      Your blog is on par with the BBC and needs correcting. Forthwith.

  35. uanime5
    April 14, 2012

    “The Treasury needs to grasp that large donors to charities do not make money themselves out of the gift – they are just being generous.”

    Then why are large donors threatening to cut their donations because they won’t get tax relief on them? Surely if they’re being generous then it won’t matter to them that the charity can’t claim as much money from the taxpayer because of their large donation.

    One has to wonder how good tax avoidance schemes are when large companies and wealthy individuals are able to avoid paying any tax. Surely this wasn’t the intention of the Government when they introduced these schemes.

    1. lifelogic
      April 14, 2012

      The tax relief in effect goes to the charity not the rich donor. Mr&Mrs X decide they can spare 100K for a charity. The charity get 100K (or if tax relief is given the charity get 200K at 50% tax and the cost to the donor is still 100K).

      Taking it away will clearly harm the charities not the rich donors.

      1. Bazman
        April 15, 2012

        So why are they cutting their donations? Have a think lifelogic and get back to us without fantasy and silly reasoning.

        1. libertarian
          April 15, 2012

          You’re not too bright are you. Its the charities that are complaining about the loss of donation income, not the donors.

          1. Bazman
            April 16, 2012

            They are threatening to give less according to the latest reports. Wonder why? We don’t respond to threats. Remember?

      2. uanime5
        April 15, 2012

        So why are the rich refusing to cut their charity donations? They can still give £100K to the charity, the only difference is that the taxpayer won’t also be forced to give £100K to this charity.

    2. Mark
      April 14, 2012

      Simple arithmetic. If a donor has an income of £1m they can’t afford to donate £1m and pay £500,000 in tax: they can only afford to donate £500,000. With tax relief available for the donation, they could donate the entire £1m.

      Be sure that governments understand how this works. The Labour government in particular had a very good understanding, and Gordon Brown in particular.

    3. Bazman
      April 14, 2012

      It’s a good point. Why are they cutting their donations? They in fact should be increasing them? Tax and charity. You should pay or will the market correct this. Tell us or shut up. Maybe ram it?

  36. REPay
    April 14, 2012

    Mike Stallard is right. The Big Society is in tatters when we need more money from the charities to fund the overspend that is never tackled by the civil service (as JR himself has written here.) We need to confront the overspend and seek savings – I recall a huge spreadsheet of ideas to cut waste – did anything ever happen or was it an eye catching initiative? It seems the reality of power is to be forced to find ways for our bloated public sector.

  37. forthurst
    April 14, 2012

    The way this government has broached the issue of the tax relief for donations to charities is characteristically inept. What actually is the issue? As JR points out, it was to be charity by generosity of time and money that would underpin the ‘Big Society’.

    Charity toward oneself or ones family is normal and natural. Charity toward others cannot be a bad thing, in principle, so what are the problems in practice when organisations registered as charities accept donations which the government then supplements with tax refunds?

    If a charity takes money which it uses to benefit either the donor or his family, is it really charitable? If a charity takes money which it then uses for mainly political purposes either here or abroad, is it really charitable? If a charity takes money which it then uses to benefit one group of foreigners abroad, is that something that English taxpayers should be expected to pay for? What about charitable giving wish is designed to solely promote the cultural interests of an alien group within society? Should public schools be entitled to charitable status if they are using that status to benefit the children of foreigners rather than less advantaged children from here?

    There needs to be far greater clarity about the real issues and it would be extremely cowardly for the government to stop all tax relief for charitable donations because they don’t wish to pick a fight with a group whose ‘charity’ is not for the general public good.

    The governments policy of treating us all as criminals and terrorists whilst operating an open door policy to all comers and treating their ‘human rights’ etc is sacrosact whilst offering our own people up to the neocons on demand is beyond repellant.

    The government should focus on those who are trying to undermine this country without planting bombs, because they are far more damaging and dangerous to our future: with an ignorant a PM as Cameron falling for ‘gay marriage’, an architypal Frankfurt School ploy designed to undermine Christianity and Western Cultural normalcy being pushed by the LibDems which is heavily infested with its adherents, it is not possible to be optimistic. Why do we have to be rulled by people who behave as if they were born yesterday?

  38. John Moss
    April 14, 2012

    So tax relief equivalent to 12.5% of income and the ability to give away 1/4 of total gross pay isn’t enough? OK, then relieve any donations to charity on death from IHT.

    In fact, just scrap IHT.

  39. Bazman
    April 14, 2012

    I would like to talk about the British peasant. Could any of the fantasists help me? If you cannot, then you should just shut up.

  40. sm
    April 15, 2012

    I also think the debate we are having is clouded by the fact we are unable to see the data the Chancellor has seen? If this data was available the debate could become a little more realistic , fact based and pointedly address some of the real problems.

    Which income group? Are they domiciled or nationals or non nationals?
    Which charities ? Where are the charities based? What activities do they do? What reasonable checks are able to be made to ensure the charity is independent of the donor and worthy of the continuing relief?

    Should they be entitled to unlimited tax relief. Given the state has to provide basic services for everyone?

    Doesn’t this all tie in nicely with a General Anti-Avoidance Rule, with specific guidance given by parliament on interpretation and intent.

  41. Dennis
    April 15, 2012

    With all the relentless discussion about the ‘charity tax’ I still have not heard in any of it how some rich people can lower their tax rate by giving to charity which is constantly repeated and that rich people are cashing in on the ‘scam’ even to lowering their tax rate to 0%.

    Although even Andrew Neil on today’s ‘Sunday Politics’ took this as fact from Grant Shapps (!), who repeated it, I thought that this must be wrong so I am glad that Mr Redwood has stated the reality that only the charities get the money tax free and that the giver does not profit from it. Why this has not been made plain over and over again in the media is a mystery. (For years we are still being told what the acronym NICE means!)

    The govt. does lose that tax but I wonder how much tax the govt. gets from those charities spending on taxable items or from fees charged etc?

    Lifelogic said:-
    “The charity get 100K (or if tax relief is given the charity get 200K at 50% tax and the cost to the donor is still 100K).”

    What? Surely the charity gets only the 100K because of no tax instead of 50K if taxed at 50%.

    1. JT
      April 15, 2012

      Effectively donations at higher rate are made to charity, rather than government.
      ie the donation is offset against payable tax

      So … doners are determining how & where their tax money is spent

      How is that right.
      It is not.

      If people want to make a donation – that should be that.
      And … with Gift Aid growing in scope — with goverment grossing back up donations. This is forcing government to allocate tax into areas / schemes it would not / the citizens would not state money to be allocation.

      The charities are squealing at the loss of income, that will now be retained for State spending.
      The doners are squealing at their loss of special treatment.

  42. Dennis
    April 16, 2012

    Now I see that both I and Mr Redwood was wrong.
    On yesterday’s BBC 4 programme ‘Sunday’ Richard Murphy of ‘Tax Research UK’ and from govt. Treasury spokesmen on today’s BBC ‘Today’ programme all stated that donors to charities DO get tax relief which can be down to 0%!!

    How come there is this confusion on this? How is it that Mr Redwood has been misinformed?

  43. Dennis
    April 16, 2012

    Also on the BBC 4 news summary at 9 am this morning it was said that, ‘tax relief on donations….’ were to be looked at – no mention of tax relief to whom, the donor or the recipient or both. Probably assuming we know that it is to the donor from the previous discussion.

  44. peter
    April 16, 2012

    This really does sound like a government scraping at the bottom of the barrel which continues to waste money on an epic scale as a continuation of policies by the last government – the top comment on big state civil servants pulling the strings surely comes in here.

    It seems like the toxicity from the Blair years which blurred the boundary between politicians and civil servants has never left us, the idea does not sound like a Tory one so has probably come from them or the Libs.

    Well run charities are normally focussed on their purpose so are probably far more effective than often wasteful government depts in delivering what they set out to deliver – the tax relief thing should therefore not be touched to any charity that delivers tangible social benefit.

    What would do no harm to look at are large organisations that call themselves ‘charities’ and the criteria needed to do so with the principle that they must deliver public benefit that otherwise government would have to fund.

    For example I believe that charity shops only have to give around 10% of their operating profits to be labelled as such however on the other hand these types of shops do fill up empty spaces in high streets so again need that relief to make them sustainable so whilst their benefit may be small they should not be touched due to their dual benefit – if they closed due to changes that would be counter productive.

    I would suggest that the gov’t of course looks at the criteria for big charities that they are there for the greater good – after all look at the RNLI as an example – no one in their right mind would want to touch that. Indeed some charities may duplicate what govt already does but if they weren’t doing it, would govt have to do more?

    My focus would be more on taking a look at the waste from things like the o’seas aid budget to countries that

    a. Don’t need it (India, China?)
    b. Help corrupt govt’s buy arms (40% of all o’seas aid to Africa from all countries is said to go on arms purchases)

    I’m sure there are many more depts that could deliver services cheaper and more effective – councils for a start could pool together and outsource large chunks of services they currently deliver as could the NHS, all public buildings could be privately managed by companies that could do it better and cheaper.

    You have already talked about road management – I know govt/civil service is slow to react but the emphasis has to be on cost cutting by doing things differently rather than finding new stealth ways of taxing people and organisations – we already pay too much.

  45. Lindsay McDougall
    April 17, 2012

    I’ve been a bit slow on this one but now I have more information. The nub of the disagreement is this. When a charity doner makes a gift, he/she regards the gross amount of the gift as being surrendered income and therefore no longer taxable. The Chancellor and his supporters on the other hand still regard the gift as income to the donor because he/she has decided what to do with it.

    So it’s a power struggle. We as individuals wish to determine what we regard as ‘good causes’, whereas the government wishes that they determine what are good causes, and they tax us to support their good causes. Once again, LibDems and Tory Wets take the Socialist line. There is another example. The National Lottery is a partial nationalisation of charity; this is confirmed by the fact that donations to charity fell when the National Lottery was started.

    The government already has quite enough power in this matter because instiutions of state can determine what is allowable as a charity and what is not. No doubt, distributing free bibles and free copies of the Koran are regarded as charitable activities, whereas distributing for free the complete works of Professor Richard Dawkins would not be so regarded.

  46. Bickers
    April 18, 2012

    Why should ordinary tax payers subsidise the tax relief given to charities? Rich people should first pay their taxes then donate to charity from net income (like the majority of tax payers have to do).

    We need to get Government spending down and that includes the vast swathe of subsidies given to vested interest groups and industry e.g. renewables.

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