Tax relief needs to benefit charities, not you and me
I'm currently on holiday at home and enjoying the end of what I am reliably informed has been the best summer in years. I’m also enjoying observing what’s rattling the cages of
Few would argue that charitable giving by individuals and a culture of philanthropy is anything but beneficial to the rich fabric of any society. Yet the role of what is described in Britain as the “third sector” – an all encompassing adjective that describes the work of registered charities, faith groups, campaigning groups, arts and cultural organisations, grass root community organisations and not for profit social enterprises, whose income is often reliant on charitable giving by individuals – is quite different from the role of the state, whose work is largely supported by taxation.
As members of society, we have a legally-enforced responsibility to pay tax, which in turn is spent by those in power, who we have democratically elected, as they see fit. By common consensus that means hospitals, schools and the like for all, no matter their wealth.
Charitable giving is not enforceable. It is freewill – determined by the individual, as they see fit. In the
Charitable fundraising is always hard work – but even tougher when your cause isn’t sexy. Ask any charity fundraiser who seeks to raise money to support the work of those affected by discrimination or domestic violence. Nor does everyone in society give. Evidence in the
Key is reported as having no apparent interest in dismantling the welfare state and leaving it to
Key has floated several vague ideas. These have included making it easier for wage and salary earners to donate directly from their pay cheque and get an automatic tax rebate and the possibility that rebates might also be available for gifts of goods and time.
Outside of the US, where the tax system is utterly different from the one that we have in New Zealand, I’m not convinced that tax relief on charitable donations that benefits the individuals is a motivator for an individual to give, nor am I convinced that tax incentives encourage more regular donations, or donations of a greater value. In the
Kiwis for the most part give because they believe in the cause – not because they are going to be rewarded financially. However, that’s not to say that tax relief doesn’t have a role to play in supporting
In the
Gift Aid can apply to one-off donations, or those over a specific period. It can be backdated for up to 6 years and in some circumstances, Gift Aid can be applied to sponsorship and membership fees. If permission to claim the basic rate of income tax back is not given by the donor, to the charity, the basic rate of income tax remains with the Exchequer. Latest figures from HM Revenue and Customs show that at present, Gift Aid payments to charities are in excess of £800 million.
Imagine what such an unrestricted cash injection could do to boost and enhance the role that the voluntary sector plays in