George Osborne’s tax adjustments penalise charities

Sara Peoples

Finding satisfactory moral justification for depriving the nation’s charities of an estimated one billion pounds cannot be an easy task. So perhaps spare some sympathy for Chancellor George Osborne, attempting to placate a public which is aghast at his proposals to prevent this tax from  damaging society’s most vulnerable.

George Osborne’s desire to restrict tax relief to £50,000, or 25 per cent of a person’s income, has horrified charities and their supporters, who have created the ‘Give It Back, George’ campaign. Founder of Ambassadors for Philanthropy, Dame Stephanie Shirley has scathingly condemned the proposals. She has implored David Cameron to stop the proposals, which have left her ‘dismayed’. Considering her findings that ‘half of all giving comes from just 7 per cent of donors,’ she has good cause for apprehension. The potential ramifications of discouraging these donors from supporting charities could cripple many worthy causes, which are already floundering since the economic downturn.

Admittedly, wealthy contributors to charities may benefit from a lesser degree of taxation as a result of their charitable giving,  yet the financial resources they inject into ailing charities is crucial to the survival of British philanthropy. What financial support is the Government promising as a substitute for the loss of funding that will doubtlessly be created by the new tax measures? Osborne has made vague promises to ‘talk with charities’ as a substitute; perhaps not the most practical alternative strategy, nor the most consoling for those who stand to suffer the consequences. Visualising the dire consequences Osborne’s proposals would mean for the underprivileged, an incentive for wealthy donors to contribute does not seem so objectionable!

Eradicating tax evasion may be a noble aim, but it is not the wealthy donors who are going to be adversely affected by the new tax scheme.  Instead, the magnitude of the consequences would devastate those dependent on charities. The repercussions would undoubtedly be fatal for many charities that are struggling to survive in the troubled economy.  Similarly, the potential consequences for schools and universities are equally grave.

Does George Osborne find the prospect of wealthy individuals retaining a modest amount of their tax in return for substantial donations to charities a less tolerable concept than the idea of preventing £1 billion of aid reaching children, the elderly and the sick from next year onwards? If so, his lack of perspective is disarming.

Dr Harpal Kumar, Chief executive of Cancer Research UK, has condemned the proposals as being completely incongruent with previous Government pledges espousing a desire to nurture a ‘culture of philanthropy’. Even within the Conservative Party itself, the new tax measures have been met with criticism, with a two thirds majority of the Coalition opposing the plans.

The Government’s assertion that its plans are intended to prevent wealthy donors avoiding income tax,  by contributing to ‘bogus’ charities, is undoubtedly questionable. Such issues could be dealt with by the Government in separate measures, or through the Charity Commissioner, without penalizing those in need.

The growing moral outcry from the public against these plans is in danger of becoming analogous with the fallout from Gordon Brown’s abolition of the 10p tax rate and Margaret Thatcher’s withdrawal of free milk for schoolchildren. Undoubtedly the best option for the Chancellor is scrapping these outrageous plans and commencing damage limitation.

The Chancellor may claim to espouse Big Society values, yet his willingness to prevent up to one billion pounds of aid reaching society’s most vulnerable, suggests that his values are in the same state the nation’s charities may be following such tax proposals: bankrupt.