Apr 212012

With the charity tax relief row, George Osborne has not had a good budget.

Most years the budget is quickly forgotten and swiftly overtaken by newer news.  But this year we’ve had catchily-named accusations on the Granny Tax, the Conservatory Tax, and the pasty Tax.  The fact that these tax increases are minor and as a whole were sensible simplifications, hasn’t stopped the press jumping on them as major news stories.

Probably the most controversial of all has been the announcement that the Inland Revenue is to clamp down on excessive charitable donations.  Osborne declared that in future no-one would be able to reclaim more than £50 000, or 25% of their gross income, against charitable contributions.

Seems sensible?  Yes, there has been mass outcry against the government.

The clampdown is absolutely right.  Nobody is stopping people from giving to charity.  Charity donations fund an enormous amount of important work for good causes.  However, most of us give our money to charity without expecting something in return.  Why should the rich be different.

If I choose to sponsor someone at work running the marathon, or set up a direct debit to my old school, or local good cause, I do it out of my own money.  My post-tax income.

If instead, as richer donors have long been doing quite legitimately, you give £1000 to charity and expect to get 40% tax relief, then in effect you are taking money from other taxpayers for your own cause.  That is wrong.  I don’t see why I should be forced to give my money to your cause simply because you are entitled to get a tax refund.

Everyone should pay their tax.  Charity comes after.  The tax relief clampdown is right and George Osborne should not back down.

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