12 April 2012

Charities tax breaks - impact analysis?

The UK government has decided to limit the tax breaks that are available for charity donations because there are some cases where people use their donations to reduce their effective tax rates to very low levels. The feeling seems to be that money donated to charities is unjustifiably lost tax. The policy appears to have been introduced without proper planning or impact analysis. Other Government departments seemed not to have been consulted.

David Gauke MP, the Treasury Minister responsible for defending the policy on BBC2 Newsnight programme tonight (12th April) mentioned charities that don't distribute much money to real causes, but refused to name them. Apparently some charities lend money back to companies controlled by their 'donor'. To me this is a sign that the Charities Commission isn't doing its job properly, not a reason to cut off significant flows of major donations to key charities that support (to pick a few from many) health, social causes, sports, and the arts.

Whether he was completely out of his depth, or just defending the indefensible, is hard to say. But to me, without names and evidence, this just looked like bullshit being raked together to defend a poorly thought-through policy announcement.

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