The Government’s rationale for including charitable giving in their proposed cap on tax reliefs has moved on from the insinuation of fraud involving “dodgy foreign charities” to the assertion that everyone should pay their fair share of tax. The basic principle of people paying tax is certainly one that I (and the majority of people in the charity sector I would imagine) agree with. How ever the key point that many of us have been trying to drive home is that charitable giving is fundamentally different from the other activities for which people can get tax relief (such as offsetting business losses), because an individual has to give their money away for the public good, and give away far more than they ever save in tax.
Unfortunately the government does not seem to accept this argument, and at least publicly is maintaining that charitable giving must be viewed in the same way as other tax reliefs. One can easily imagine the Liberal Democrats sticking to this as a principle, so perhaps this intransigence is simply an unfortunate consequence of coalition politics. However, it seems very peculiar that the Conservatives, who only two years ago extended to every one of us an “invitation to join the government of Britain” and have always told us of their desire to build the “big society”, have suddenly discovered a deep ideological commitment to State-controlled taxation and redistribution. Surely, many of us will have thought, it is in the DNA of Conservatives to believe in the value of individual responsibility and social action?
If only, I can hear you say, they had put down their thoughts on the importance of charitable giving and the tax treatment of donations in written form somewhere. If only that happened to be in an official policy document, with a foreword by David Cameron…
If only indeed.
Well, imagine my delight then, to see that the Independent and the Daily Mirror diary sections have picked up on the fact that the Tories did exactly that in 2008. The document in question is policy green paper published in opposition entitled “A Stronger Society: Voluntary Action in the 21st Century”. I certainly recommend that anyone currently trying to argue against the government’s proposed cap takes a look at this little volume. I think you will find it extremely informative in terms of the ideological debate over whether charitable donations should get tax relief. However, for those who don’t have the time or inclination to trawl through the document, I have pulled out some of the best bits below.
I know what some people might say: that using someone’s past words against them is a cheap tactic. But this isn’t true- it is not just a cheap tactic; it’s good fun too… And more seriously, it exposes the deep contradiction between the recent pronouncements about charitable giving by some Conservative ministers and their party’s core values, as put down in writing in an official statement of policy.
And so, to the edited highlights. The first of which is an instructive overview of how the Conservatives want to approach dealing with the sector:
“A Conservative government will always have in mind that the voluntary sector must be free to develop according to the ambitions and energies of the people who participate in it, and the needs of the people they help. Our first priority, like the doctors’ Hippocratic Oath, is “first, do no harm”.”
Wise words indeed, although how comfortably they sit with a decision to introduce a policy that 9 out of 10 Charity CEOs think will reduce the amount of major donations to charities, I am not sure. Perhaps we are all mistaken though, and charitable giving isn’t that important? But wait, what’s that?
“Charitable giving should be a key concern for any government that cares about the independence and diversity of Britain’s charities.”
Fairly emphatic, then. But still, maybe the taxation of donations isn’t that important?
“The Government can, however, influence the environment in which people choose to give of their time and money through its policies on the taxation of donations.”
“Tax relief on charitable donations – especially through the Gift Aid scheme – is a great encouragement to giving.”
Ah, so it appears the 2008 Conservatives do think that tax is an important factor. But maybe we are misunderstanding the way in which it is important. I mean, is there really a principled reason to believe that charitable donations should be exempt from income tax? Over to the Tories circa 2008:
“Gift Aid is the most important direct way in which the Government can help citizens help the voluntary sector through giving and philanthropy. It works on the principle that we shouldn’t tax people on what they give to charity. This is a good principle.”
And just to reiterate:
“We regard it as essential to maintain link between rates of income tax and gift aid since this embodies the principle that charitable giving should be out of untaxed income.”
So I take it the Tories are fans of Gift Aid then? It appears so:
“A Conservative Government would reconvene a purposeful discussion between charities and HM Revenue and Customs, to bring the conduct of Gift Aid into the 21st century in order to eradicate unnecessary bureaucracy and boost take-up.”
I will leave the 2008 Tories to give their own take on the importance of charitable giving within society, and the distinction between this and taxation:
“…In this age of blurring boundaries between the public, private and voluntary sectors, charitable giving is more important than ever. Consider the circumstances in which we transfer our wealth to each of the three sectors: When we hand over our cash to the state it is because we have to; when we do so in the marketplace, it is because someone has made it worth our while; but with a charity, it is because we want to – with the benefit of others in mind and not ourselves. In short, the essential difference between the public, private and voluntary sectors is the difference between a tax, a deal and a gift. We believe this is a distinction worth preserving.”
This document is important because it demonstrates that it is not as though the Conservatives have not thought about this issue. They have a clearly articulated, principled position, but one that happens to be at odds with much of what they are currently saying. Obviously the reality of coalition politics means that compromises need to be made, and perhaps the Liberal Democrats have a different view of the relationship between taxation and giving. However, a compromise should surely not involve abandoning basic, core principles that you have previously committed to?
This is something that we should continue to press Conservative ministers on, as their current position seems extremely awkward in the light of the views they have previously subscribed to.