The Coalition’s proposal to limit tax relief on charitable donations to £50,000 per year or 25% of a donor’s income has touched a raw nerve within the government’s natural constituencies – so called “wealth creators” and those who back the notion of “the big society”.
At present there is no limit on the amounts that can be donated to charities, thus making it possible to avoid paying tax altogether. One thousand millionaires currently pay 30% or less tax while nearly one in 10 people earning more than £10 million a year pay less than 20% in income tax, according to the Treasury.
Outraged members of the rich list have joined up to complain that the Budget proposal would “deter future donors” in a letter to the Sunday Telegraph. Infringing their “right” to use their wealth as they see fit is a restriction on the “liberties” of the rich and the super rich. To paraphrase Mandy Rice Davies, “they would say, that wouldn’t they?”
The idea that you can appear righteous and generous by giving away some of your wealth to the worthy poor and other selected “good causes” goes back to Victorian times and has long been the foundation of old Toryism as well as liberalism.
Philanthropists like Joseph Rowntree combined Quaker beliefs to build model housing schemes and fund research into social issues. Others raised money for public parks.
But the notion of selfless generosity has gone out of the window in favour of venal self-interest. Offsetting tax by making donations to charity is a convenient way for millionaires to minimise their tax payments. In fact Osborne’s proposal would only affect those giving more than £200,000, so it hardly “punishes” anyone but the super rich.
The web of connections between charities, politicians, corporate and banking interests are more often than not incestuous. Former prime minister Tony Blair, for example, has let it be known that "this is absolutely the right moment for government to do all it can to promote philanthropy; and certainly nothing to harm it."
Not too surprising for a man whose Faith Foundation pays six figure salaries to its staff. And his wife Cherie Blair’s Foundation for Women is backed by top US banks, JP Morgan Chase Foundation and Goldman Sachs.
Behind the pious phrases of “giving back to the community” is not only greed but a deep-seated animosity to the notion of a state that can tap into the income of the rich to provide any kind of benefit to the rest of society including the health service, pensions, education and all the rest.
So why has the coalition made this move? The globalisation of industry and banking combined with tax avoidance, growing unemployment and an aging population has significantly reduced state revenues. So little surprise that the state is desperate to claw back tax money while giving the appearance – and that’s all it is – that “we’re all in together”.
But fear not, ConDem ministers! Shining knight Ed Miliband has come riding to the rescue. Trying to outflank the coalition with a demagogic attack on “big money” funding of political parties he has proposed a £5,000 cap on donations. This makes Osborne’s £50,000 limit on charitable donations look like a tax bonanza to the rich.
Miliband equates trade union donations with those given to the Tories by capitalists and bankers. This is really reactionary and shows what contempt the Labour leader has for ordinary workers. His proposed cap also opens the door for Tories to demand that union members in affiliated unions opt in to paying the political levy to Labour (at moment unionists have to opt out – i.e. make a conscious decision not to pay).
Yes, they are all in together – the major political parties, that is. That’s why so many people are deciding to hold on to their precious votes until there’s something better to use them on.
A World to Win secretary