Dominic Lawson: Class warfare in the age of philanthropy: Stop bashing rich people who give to charity

It pains some people to think of the pleasure

it gives the rich to tithe their income

Share

When the Church of England accuses the Government of "carpet-bombing" England's historic places of worship, there are only two possibilities. Either our warplanes have been misdirected, in which case heads must definitely roll at the Ministry of Defence; or this is a metaphor. It is the second: epic hyperbole from the Cof E's press office in its attack on George Osborne's proposals to limit tax relief on charitable donations.

The Church is far from alone: the entire voluntary sector and most of the press have been engaged in their own rhetorical missile strikes against the Chancellor's plans, outlined in the Budget Red Book but which only percolated through to public attention last week. Yet the Government is refusing to retract, despite every prediction of a rapid U-turn in response to what is presumed to be universal hostility to this raid on Cancer Research UK, Macmillan Nurses and every other good cause you can think of.

Osborne is standing firm (though silent) because he understands something rather unattractive about the British, or at least that significant proportion which would rather see such charities suffer if it meant the very rich might have the smile wiped off their faces. It causes such people almost physical pain to think of the possible pleasure it gives to the rich when they tithe their income to charities of their choice, rather than in taxes to fund the state's own choice. The latter, you see, is "democratic" and therefore good.

The Government has also been appallingly successful at creating the impression that these wealthy philanthropists are not only benefiting psychically from their donations – disgraceful! – but also that somehow the current system of tax relief means they are keeping more of their own money than they would if they "paid tax like the rest of us".

The reverse is the case. As Lord Jacobs, who until recently took the Liberal Democrat whip in the Upper House, observes: "Limiting tax relief to £50,000 a year is based on a complete misunderstanding of the financial consequences of charitable donations. George Osborne implies that taxpayers can profit from the current arrangements but that is simply not the case. I have twice given a million pounds to charity. The tax relief at that time was about £400,000 on each million pound donation. Each time the net cost to me, after the tax relief, was £600,000. I do not call that making a profit." So Jacobs was on each occasion roughly £200,000 worse off because he had given the money to charity, than he would have been if it had been simply taxed at the then top rate.

It is true that money given to the charities of Lord Jacobs's choice was, to the extent of £400,000 in each case, money not available to the state to spend as it wishes – and if the donations were "gift-aided", then the state would have to cough up accordingly to those charities. This is the best case for Osborne (and indeed for Jacobs's own former colleagues, since the proposal owes much to the advocacy of Nick Clegg and Chief Secretary Danny Alexander). Yet if you are one of those who agrees with their proposal, then you would also have to believe that there is something socially irresponsible about ticking the gift-aid box when you make a contribution, to, say, a fund-raising drive by the Disasters Emergency Committee.

In fact, the state is already the overwhelmingly dominant player in what would once have been termed charity; this paradoxical and even unhealthy tendency is clearly one the Government wants to protect, for all its rhetoric about the Big Society – which, if it meant anything, was about releasing the grip of the state on the voluntary sector.

Five years ago the Civitas think tank produced a fascinating study on this, under the title "Who Cares?": it showed how many notable charities had become completely dependent on the state, rather than voluntary donations. The National Family and Parenting Institute (which was a particular favourite of New Labour ministers) received 97 per cent of its income from taxpayers – and don't tell me that you were consulted about that.

As a whole, the Civitas report revealed, the charitable sector actually receives more money from the state than it does from voluntary donations. As you might expect, the vast bulk of that state funding was directed at the largest charities, where the chief executives tend to be paid handsome salaries and which have "media affairs" and "government relations" departments expert at fighting the turf wars to retain and enhance their funding.

Their firepower is now being turned on the Government; but the charities we should be most concerned about are those small ones which have the least political clout, some of which could indeed be seriously damaged by Osborne's proposals, as they tend to be entirely reliant on a handful of genuine donors.

Of course, it might be possible for those benefactors to give much more, in order to make up for their and the charities' lost tax relief; but that would depend on personal circumstances, which cannot be known by the Government.

For example, I have a friend who gives over 95 per cent of his (considerable) income entirely to cancer research charities; those charities will certainly lose as a result of Osborne's proposals. Yes, more tax will be collected from this person – but I doubt the net benefit to the public good, however expressed.

There is, as you would expect, an argument about the scale of the damage. The Community Foundation Network said, "We estimate that if you add together those who would have given and others discouraged from being donors, the charitable sector would be £1bn worse off".

These days, £1bn is the standard invented figure used to impress or scare, according to choice. The Government seems to think that it will save around £100m by introducing a cap on tax relief for charitable giving –out of a total annual public expenditure bill of over £700bn. Bravo, but if the purpose is to reduce the national debt, why not do as the Indian government has generously suggested, and cease giving it £280m a year in aid – six times, by the way, the amount it receives from any other country.

That, however, would not just make the Department for International Development feel less loved; it would also fail to meet the Government's narrow political objective of appearing tough on tycoons and tough on the causes of tycoons.

d.lawson@independent.co.uk

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

SQL Technical Implementation Consultant (Java, BA, Oracle, VBA)

£45000 - £55000 per annum + Benefits + Bonus: Harrington Starr: SQL Technical ...

Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

Lead C# Developer (.Net, nHibernate, MVC, SQL) Surrey

£55000 - £60000 per annum + Benefits + Bonus: Harrington Starr: Lead C# Develo...

Technical Software Consultant (Excel, VBA, SQL, JAVA, Oracle)

£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...

Day In a Page

Read Next
 

The leak of Jennifer Lawrence's nude photos isn't her fault. But try telling that to the internet's idiots

Grace Dent
US first lady Michelle Obama (2nd L) and her mother Marian Robinson (L) share a light moment with Chinese President Xi Jinping (2nd R) and his wife Peng Liyuan  

Europe now lags behind the US and China on climate change. It should take the lead once more

Joss Garman
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Fashion walks away from the celebrity runway show

Fashion walks away from the celebrity runway show

As the collections start, fashion editor Alexander Fury finds video and the internet are proving more attractive
Meet the stars of TV's Wolf Hall... and it's not the cast of the Tudor trilogy

Meet the stars of TV's Wolf Hall...

... and it's not the cast of the Tudor trilogy
Weekend at the Asylum: Europe's biggest steampunk convention heads to Lincoln

Europe's biggest steampunk convention

Jake Wallis Simons discovers how Victorian ray guns and the martial art of biscuit dunking are precisely what the 21st century needs
Don't swallow the tripe – a user's guide to weasel words

Don't swallow the tripe – a user's guide to weasel words

Lying is dangerous and unnecessary. A new book explains the strategies needed to avoid it. John Rentoul on the art of 'uncommunication'
Daddy, who was Richard Attenborough? Was the beloved thespian the last of the cross-generation stars?

Daddy, who was Richard Attenborough?

The atomisation of culture means that few of those we regard as stars are universally loved any more, says DJ Taylor