The real issue at the centre of the row over the proposed tax relief cap is not donations to charities, but about whether wealthy people should be able to avoid their obligations to society, Conservative MP Richard Harrington said last night.
Four hours into the Parliamentary debate on the second reading of the Finance Bill 2012, which had been peppered with references to how the tax relief cap would impact on charities, the MP for Watford moved the discussion onto a more ideological level.
“There is a serious point to make,” he said, “which is that I do not think this debate is about charities. Rather, I think it is about whether, in a sophisticated society such as ours, where 40 per cent-plus of gross national product is spent by the government, certain individuals should have the freedom to decide, for whatever reason, quite legally, that they will not pay any tax at all.
“Although we are talking about charities, society has to make a decision on that question. Is it acceptable, under any circumstances, for people obeying the law and earning money – a lot of money – to say ‘I’m opting out of paying tax on my income’ because they are giving to charity?”
Harrington said he found it unacceptable that people should be able to choose not to pay tax using various tax avoidance methods, including charitable giving.
“Should people be able to choose to support, say, the National Theatre, the opera and Christian Aid, while choosing not to support the National Health Service, education and social services? I ask the Opposition to consider that point before being so critical of the government’s desire to make tax fair for all and to ensure that very wealthy people no longer pay no tax at all.”
No exemption for charities
Earlier in the debate, Chief Secretary to the Treasury Danny Alexander ignored a direct question from Conservative MP David Ruffley as to whether he would consider exempting donations to UK charities from the cap, but said discussions with charities and philanthropists are ongoing.
In response to a query from Labour’s Andrew Love about how the government squares the policy with the objectives of the Big Society, Alexander reminded the House of the “many other measures” to support charities, such as Big Society Capital and gift aid on small donations.
And in response to a question from Tory MP Mark Field as to whether the government intends to restore the tax relief benefit once the deficit has been reduced, Alexander said he could not confirm that intention, blaming the “major ongoing problem with the sustainability of our public finances”.
Labour: Government should have consulted
Alexander’s shadow, Labour MP Rachel Reeves, had attacked the way the proposal was announced. She said: “Instead of the government making up policy as they go along, without bothering to talk to anybody who is affected by it, they should have consulted the Charity Commission and the charities affected.” She went to say that the Press Association has reported that a U-turn is coming, and asked Alexander to confirm this. But Alexander did not reply.
Conservative MP Ben Wallace asked Reeves whether she agreed that “before people give money to charity, they must also fund their obligation to society? They must do that first, before they start funding charity.”
Reeves replied: “If the honourable gentleman extended that logic, there would be no tax relief for giving to charities. I am not sure if that is what the government are proposing.”
She went on: “Calling people who give to charities tax dodgers, as this government imply, and referring to charities as dodgy, when those charities include Macmillan, Red Cross, Unicef and Oxfam, is unhelpful.
“If the government truly want to increase giving, the language should be tempered and people who try to do the right thing and support worthwhile causes should be encouraged not insulted, for what they do.”