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

Recruitment Genius: Business Manager

£32000 - £40000 per annum: Recruitment Genius: A Business Manager is required ...

Recruitment Genius: Operations Manager

£45000 - £55000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Panel & Cabinet Wireman

£20000 per annum: Recruitment Genius: Panel Wireman required for small electro...

Recruitment Genius: Electronics Test Engineer

£25000 - £27000 per annum: Recruitment Genius: An SME based in East Cheshire, ...

Day In a Page

Read Next
Newspaper stands have been criticised by the Child Eyes campaign  

There were more reader complaints this year – but, then again, there were more readers

Will Gore
 

People drink to shut out pain and stress. Arresting them won’t help

Deborah Coughlin
A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Homeless Veterans appeal: Former soldiers pay their respects to a friend who also served

Homeless Veterans appeal

Former soldiers pay their respects to a friend who also served
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?