Nick Clegg: Charity tax U-turn means ordinary taxpayers will subsidise rich people’s donations

Clang. Another budget u-turn drops. All charity donations will now be exempt from the clampdown on tax avoidance.

As always with u-turns, one of the lasting consequences is that ministers and MPs have repeatedly defended something on the record which they then abandon. People are made to look like wallies.

The charity tax was a problem for David Cameron, because it appeared to undermine his Big Society vision of us all being enthusiatic philanthropists.

But for Nick Clegg it was a key part of his so-called “Tycoon Tax”, to stop the very wealthy using a whole range of schemes and allowances to drive down their tax bill.

When I interviewed the Deputy PM last month, he said the coalition would look at the particular grumbles of charities, but insisted that ordinary taxpayers mustn’t subsidise the charitable giving of the very wealthy. His point, one assumes, still stands.

This is what he said:

“I really think it’s quite important to remember that 25 per cent of a very wealthy persons’ income for a year going tax free to charities is a considerable tax break. There just is a balance to strike here which is, yes we want to encourage charitable giving, it’s either £50,000 which by most people’s standards is a lot of money, or 25 per cent of income which ever is higher, if you are earning £4m a year, that’s a million quid. You can give more, there is nothing to stop you giving more.

“People think we have completely stopped any allowance. We haven’t, it is still relatively generous.

We will look at those really tough cases, there is an underlying issue here that if you don’t do something about these allowances which allowed very wealthy rich people to avoid paying income tax altogether, you are effectively asking ordinary taxpayers to subsidise them.

“In austere times with not a lot of money around the principle of making sure everyone pays their fair share, what I call a tycoon tax, has got to be right.

“The principle is clear and we will stick to that.”

Er… except they won’t. Oh dear.

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• tenretnitb

  I am replying this way because there is no reply option on your last missive.I observe you have not answered my question.You dont have to ,of course,but your action says something.I will not comment on most of your post because its not clearly written,in that it seems to be a collection of other peoples thoughts and you feel that repeating them,in any order, will impress people with your knowledge even though your post is ,if anything ,rambling rather than direct.I also have a suspicion that repeating your beliefs is a defence against examining the facts and having to think for yourself.Do you think that the more often you say it the truer it becomes?In your last paragraph you ask why the rich need to be incentivised by “giving” them more,and the poor incentivised by “giving”them less.This seems to be the key to your misunderstanding.Reducing taxation is not “giving” anyone anything;reducing taxation allows those who have earned money to keep more of their earnings to spend as they wish,on luxuries or charity giving.Their choice.As regards “giving”to the poor,that should be the last resort.Remember the saying “give a starving man a fish and you have fed him for one day;teach him how to fish and you have fed him for a lifetime,?The aim should be to help them  into a job which matches their capabilities and character,then they won`t need a handout but can take pride in their ability to make their way in the world and provide for their family.The disadvantage of this course of action to people like you is that,when they are not dependent on your charity handouts,they need not take any notice of you.You lose your influence over them,and your feelings of self-importance and smug charity-giving to those poorer than yourself,and your associated feelings of superiority, would be seriously damaged.People like you need the poor so you can feel superior to them and organise things on their behalf,but you are going to ensure they stay poor and in need of a handout because,psychologically,you need them.You are a bit like Stalin:he wanted everyone to be dependent upon him and his decisions,so he murdered millions of kulaks(independent peasant farmers)because they could work their small farms to feed their families,they didn`t need Stalin.Stalin changed all that.He murdered them,and everyone else who was independant.He made everyone in Russia poor and dependant upon him.You are following the same policy:help the poor,but keep them dependant upon you.I want a reduction in the regulations and taxes on small businesses to encourage more to start their own businesses,be succesful,and be free of dependency on people like you.Goodnight.

• Alec78

  If you knew anything about academic research you would understand the difference between referencing the thinking of others as opposed to merely cobbling together other people’s thoughts.

  So, I’m a Stalinist because I believe in a fairer and better education for all? I’m a Stalinist because I believe in fairer access to all professions for all? I’m a Stalinist because I believe in welfare for those who need it? You need to read more widely if you have been taken in by the suggestion that become can become dependent on 67 pounds per week! Who’d take that rather than a job? I’m sure in your world everyone wants to run their own business – is it still the ’80s? – but in most of the working class industrial and manufacturing areas destroyed by Thatcher, people just want a good, comfortably paid working class job that they used to have: skilled work where they are respected, making something that the people of the country can use or export. Is that too much to ask, especially in a country where the debt goes up daily as we produce less and less of our own (chasing the smallest costs and greatest profit as the expense of employment of our own people)?

  It’s a measure of you and your ilk that the second anyone suggests supporting those in need, or even hints at the need for society to play its role, you bandy around Stalin insults. Cliched, of course, but so inaccurate regarding welfare in developed countries as to be embarrassing. Despite the obvious failure of ‘greed is good’ individualism, you’re still bent on it being the only way, because that’s the best way to defend your place in society (that and suggesting, conveniently, that you have got there through ‘working longer and harder’ – a phrase which, if I could be bothered, I would deconstruct the false premises on which it’s based). And if anyone questions you, they must be a Stalinist; you meanwhile can show your humanitarian side by spouting some patronising nonsense about ‘teaching’ those poor people to be self-sufficient. Making decent jobs available for them in society might be a starting place. Sorry, you don’t believe in society. It’s ‘dog eat dog’ – that works, both economically and socially. Clearly.

• MahmudH

  It comes to the same thing. If you run a business and pay your own taxes, then the government doesn’t add anything on, rather you subtract the the donation from your net profits before tax. It comes to the same thing.

  If ones donation forms a very small part of the charities total income, it is easy to see this gift aid/tax free issue as a small matter, a minor add on which the government can give or take without making any real difference. Its all very anonymous when you have a small donor and a big charity. 
  However things are very different if you have and big donor and a small charity, Things become very personal. The donor wants to know exactly what will be achieved with the money he or she is giving up. And the tax-free/gift-aid component suddenly becomes a big issue if 100% more (with a 50% top rate) or soon 90% more (with a 45% top rate) will be achieved through it.

• Frank_Poster

  Good perspective that you provide, thanks.

• tenretnitb

  As expected, you continue to avoid answering questions and you misinterpret my comments so you can criticise what you allege I said.And you do it in a way which enables you to spout your one-sided views.It`s an old tactic. Teaching a man a trade(teaching him how to fish!) to make him independent and self-reliant; giving him pride in his ability to provide for his family,non of this is dog-eat-dog.But it frees him from the likes of you and all the others who promise them hand-outs which are intended to make them dependent on you.Reduce the reulations restricting the start of new businesses,cut the taxes on business start-ups and set the people free.Many will succeed,some will grow to be employers themselves,creating jobs for others.What frightens you is that that they will then ignore you entirely.As I do.Your so-called help would keep them dependent and subservient.My aim is to set them free.many wiil be able to earn more than I do.I dont mind that.You do.

• http://www.facebook.com/tim.chiswell Tim Chiswell

   In what way is Eton school (a registered charity) a ‘benefit to the public’?
  Yet if a wealthy ex-scholar there chooses to donate £105,000 to his alma mater, then he only need pay £70,000 from his own pocket, and the other £35,000 will come from OUR taxes. Yours and mine.
  Are you ok with that? Im not.

• Alec78

  Bizarre. The only question I never answered was the one wherein you asked what point of yours I was saying was invalid (the reason I didn’t answer was because anyone with a reading age of more than 12 would have seen that I used the most basic syntactical indicators to make clear which point I was referring to in my original post).

  I’m not quite sure how you think I’m controlling anyone by believing that people out of work should be entitled to welfare support. I’ve already given you the actual figures that this represents, but instead of using a bit of logic and seeing that no one is going to be ‘dependent [or] subservient’ on that amount however much you think I want them to be, you spout the caricature you’ve been conditioned with since birth – anyone suggesting anything ’socialist’ must want to lead a world of clones, all unable to think or work for themselves! I also happen to believe that the Government should build annually social houses the way they did in the ’70s, thus giving people the option of buying or renting (at reasonable cost), unlike today where everyone (except those of a certain level who don’t have these worries) is a slave to exorbitant renting from unregulated (as they are in Holland) private landlords, or a slave to a massive mortgage. Is that controlling anyone? Because I think the only controlling going on is that occurring by the ruling hand of capitalism and ‘profit over people’ in the current system.

  Small businesses! Brilliant. Have you been living in a cave for 30 years? Have you heard of ‘globalization’? It’s a little thing whereby your blessed market has needed to expand further and wider, and power and money has become concentrated in the hands of fewer and fewer. They’re called multinational businesses and corporations, and they’re the reason that for the past 10 years the vast majority of ’small businesses’ have gone to the wall. Regardless of this, and regardless of the fact that a society can’t run on everyone having a small business, but there needs to be a variety of jobs, industry and business, and roles within those, you betray your class by thinking that lowering tax on small businesses gives everyone the opportunity to start one up. The majority of people don’t have and will never have mummy and daddy’s capital, and you need capital to start up a small business, long before tax becomes a concern.