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Backbenchers demand retreat over charity cap
11 April 2012
George Osborne was hit by a backbench revolt today over plans to cap tax breaks on giving to charity.
Tory MPs demanded a “review and retreat” on the proposal which has sparked fury among leading charities and philanthropists.
Amid warnings that the move to limit reliefs at £50,000, or 25 per cent of income, is already hitting donations, they raised fears it will cause lasting political damage.
However, Nick Clegg became the latest senior coalition minister to defend the proposal, which was unveiled in the Budget, insisting it was needed to ensure the super-rich pay their “fair share” of tax.
That followed anger among philanthropists at being branded tax dodgers after Downing Street said some donors were “exploiting” the system by paying into bogus charities.
But Conor Burns, who is ministerial aide to Northern Ireland Secretary Owen Paterson, said that was a matter for the Charity Commission rather than an argument for closing off “legitimate giving”.
“I think it’s time that we do a very quick review and retreat on this,” the Bournemouth West MP told the Standard.
“Charitable giving is ever-more important and we are all seeing that in our constituencies particularly at a time of frozen or reduced government spending.
“Central to what the Prime Minister has been talking about in terms of the Big Society are voluntary and charitable groups. We should be doing everything we can to encourage more and more giving.”
Mark Pritchard, secretary of the backbench 1922 Committee, added: “This appears to be going in the opposite direction of encouraging philanthropy and major giving to charity.
“It needs to be reviewed as it is already having an impact on charities ranging from fighting cancer to providing fresh water abroad.”
He added: “We need more philanthropy not less philanthropy and this is not the way to do it.”
Another MP privately raised fears the move would bring more political damage than money for the Treasury coffers, saying: “It is the signal it sends.”
Ministers have vowed to work with charities to ensure those that rely on large donations will not suffer.
But Mr Clegg insisted the move was needed to stop “very wealthy” people using the relief and other tax breaks to avoid paying income tax.
Defending the new limit, he said: “I don’t think a quarter of someone’s overall income for people who are in many cases multimillionaires is a terribly sort of restrictive cap — that still allows people to make very significant contributions to charity in a way that is preferential to their tax arrangements.”
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