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?