Scrap Charities

Seriously, I mean it.

There has been a recent hoo-hah about the tax-deductibility of donations made to charities by individuals with large incomes. The proposal tabled as I write this limits the amount of tax-deductible donations to the greater of £50k or 25% of the person’s income. The justification for it is that the current system allows the rich to directly choose how that part of their income which would otherwise be tax is spent, whereas the majority of the population do not have that option.

This is a strong moral argument, but the proposed remedy stops well short of the position that you would get to if you accepted that argument: if you truly buy into it the consistent solution is that no donations to charities should be tax-deductible. I see nothing magical about the figure £50k that means I should be able to direct that amount of tax-deducted spending and no more or less.

The main criticism of the current proposal in the media seems to be that it is inconsistent with the government’s “Big Society” drive to encourage volunteers to work with their community to get things done. I actually think that removing the tax-deductibility of donations would have the opposite effect: by reducing the amount on cash we can comfortably donate to “good causes” by up to 50% it creates a situation wherein we need to do something else (e.g. volunteer work) if we want to continue to feel as smug about all the good we’re doing as we are used to feeling.

An alternative, which I actually prefer, is for a lot of organisations to lose their charitable status. Arts charities for instance: it is hard to argue that one should be able to donate £250k to their favourite theatre to subsidise a middle-class leisure activity rather than paying £125k in income tax to be spent on the NHS, schools, armed forces, police, and other services. It is even harder to justify the charitable status of religions: why are we subsidising the marketing arm of a non-domiciled inter-dimensional corporation (the rest of which may not even exist) at the expense of people we can be certain exist and need help.

There are probably a few charities which “deserve” to continue to be tax-deductible, but I think the net harm of stopping the whole system is less than that of allowing it to continue as-is. If we make any exceptions the whole thing becomes a political football and the undeserving-but-powerful will win out over the deserving.

As usual I welcome your comments below.