Alison Elliot – Convener, SCVO
Ed Milliband hit the nail on the head. The Budget managed to give tax concessions to the wealthiest people in the county, except for those who were doing some good with their money. Placing a cap on tax relief for charitable donations will hit charities badly but is a strange way to cut down on tax avoidance.
If rich people want to conform to their stereotype of being greedy, they’d be better off paying tax than giving it to charity. It’s charities who will suffer.
The argument is obscured by the emphasis on large donations.
Obviously, endowing a research unit can only be done by people who have a lot of money to start with, but that doesn’t mean that these people don’t also give to small charities for whom their donation is a lifeline; many well known individuals set up charitable trusts that do a lot of good quietly.
I suspect that the large, highprofile donations will continue.
They will cost more but, if you are in a position to pay for a memorial of some kind to a beloved relative, you’re likely to still do it. It’s more likely that the more modest donations will feel the draught more, with big consequences for small initiatives.
But the damage of this proposal is more pervasive. If you link giving to charity with avoiding tax, then anyone who fills in a gift aid form is going to wonder if they’re doing the right thing. They certainly are, and many charities depend on their supporters doing just that. But I suspect we’re going to have to work hard to remove that shadow of wrongdoing from the simple action of gift aiding donations of all kinds as a result of this proposal.
And that goes to the heart of this question. I’ve always been fascinated by the principle underlying gift aid and charity tax relief. Basically, the Government is saying that giving to charity isn’t like spending money on other things. In supporting a charity, you are contributing to the public good, which is the Government’s aim as well and so it’s appropriate that the tax should be diverted to the charity.
In the wake of the Christie Commission, I believe this even more strongly. What was clear from the Commission’s work is that we have to reduce the demand on our public services.
And charities can do that through keeping people out of hospital, or out of prison, or generally helping to give them a purpose in life that contributes to their well being.
This proposal is an attack on the key importance of charities and the voluntary sector in building the public good.
There’s something seriously wrong when there’s an outcry from the voluntary sector that seems to be in support of the wealthy.
That’s because tax avoidance is a smokescreen for an attack on charities.