Letter: Squeezing the helping hand

Sir: Your coverage of the recently published report Voluntary Action has focused on the tax reliefs enjoyed by charities. It is a source of continuing concern to charities that there is little recognition of the fact that they already pay significant amounts of tax each year. The figures speak for themselves: from 1989 to 1992 the net loss to charities in tax paid as opposed to tax recovered was pounds 97m.

It is true that charities do not pay tax on their income - but as the majority of services provided by charities are subsidised by voluntary donations (most of which comes from money which has already been taxed), the issue of tax on income is more theoretical than real. In fact, the amount paid in irrecoverable VAT is more than 10 per cent of the amount received by the sector in voluntary donations.

It is time that the true tax position of charities was recognised, once and for all, for what it is - a drain on the resources of charities and an impediment to fulfilling their true objectives.

Yours faithfully,

IAN MACGREGOR

Vice-Chairman

Charities Tax Reform Group

London, SW1

13 October