George Osborne was forced into another humiliating U-turn today - this time on the charity tax, the fifth government reverse this week.
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George Osborne was forced into another humiliating U-turn today – this time on the charity tax, the fifth government reverse this week and one they tried to bury under the weight of dead man walking Jeremy Hunt’s impending implosion at the Leveson Inquiry and Andy Coulson’s perjury charge.
The BBC reports:
He has announced there will continue to be no limit on what an individual can donate to charity and offset against their tax liability. A spokesman said the Treasury had listened to the views of charities.
It is the latest in a series of U-turns on policies announced in the Budget, including the pasty and caravan taxes.
Mr Osborne announced in his March Budget that from April 2013 the maximum amount that would be able to be reclaimed in tax relief – including on charitable giving – was £50,000 or 25% of the individual’s income, whichever was the greater.
The chancellor said in a newspaper interview he had been “shocked” by the scale of legal tax avoidance by the very rich, after seeing the result of a confidential study by HM Revenue and Customs and this was a “specific” loophole he wanted to close.
But the plan was met with dismay by charities who claimed it would cause major donations to stop.
With the Huffington Post adding:
This is the government’s fifth U-turn this week – it as already ditched or watered down plans for VAT on cornish pasties and static caravans, secret trials involving sensitive evidence and a study into the humane killing of buzzards.
The government made the U-turn on Thursday lunchtime, while Jeremy Hunt was undergoing a thorough grilling at the Leveson inquiry and the spotlight was also on former Number 10 spin doctor Andy Coulson, who has been charged with perjury.
It was not immediately clear which embarrassing event that ministers were trying to bury, or if the government had just decided to get all the bad news out on the same day.
The policy had been widely criticised, and with good reason; as Tony Blair explained last month:
“This is absolutely the right moment for government to do all it can to promote philanthropy; and certainly nothing to harm it.
“When acute crisis threatens, government can act with speed. But otherwise it ponders endlessly and then proceeds at a glacial pace. It is into this space – not as a substitute but as a complement to conventional government and politics – that the philanthropic sector has marched.”
• Osborne’s inevitable pasty tax U-turn set to cost Treasury £35 million 29 May 2012
• More than 70% of public want Osborne to U-turn on cuts and adopt a Plan B 29 May 2012
• Blair makes the case for philanthropy 22 Apr 2012
• Cameron’s attack on philanthropists is the latest nail in the Big Society coffin 11 Apr 2012
• As Cameron talks up the Big Society, it’s crashing down 6 Jun 2011
As Left Foot Forward reported on Tuesday, the pasty tax U-turn looks set to leave the government a £35 million black hole. The charity tax reverse, in terms of the cost to the coalition’s credibility as well as the cost to the Treasury, may end up being much, much higher.
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18 Responses to “Osborne tries to bury charity tax U-turn – the fifth flip-flop this week”
Yrotitna
Osborne tries to bury charity tax U-turn – the fifth flip-flop this week: http://t.co/Mpu1vMIW by @ShamikDas #CharityTax #Leveson
TristanPriceWilliams
Would it perhaps have been a good idea to listen to the charities before making the original decision?
Given the information that Blair and Cameron are in regular contact about how the country is run, [perhaps it was Blair that the government listened to, rather than the charities. Or maybe it was just some very rich people who made it clear that Osborne should not be taking away a route to tax avoidance from them. Or maybe both; or maybe Blair, being a very rich man, was talking for the very rich.
It’s all so complicated.
Matthew Smith
Osborne tries to bury charity tax U-turn – the fifth flip-flop this week: http://t.co/Mpu1vMIW by @ShamikDas #CharityTax #Leveson
Duncan Stott
This article is dumb, both in principle and pragmatically.
First, the principled bit. If politicians can’t change their mind once they announce something, that is deeply erosive for democracy. They put Charity Tax out to consultation. If they’re not supposed to change their mind, what’s the point in consultation? We should want the government should be deliberative and communicative.
And in terms of practical politics, why do you want to make it as humiliating as possible for the government to move away from a policy you disagreed with? The government has done the right thing today. Criticising the government for doing so will encourage them to keep their bad policies in the future.
Lee Griffin
In an ideal world they would listen first, but clearly the machinations of government don’t operate that way. Someone comes up with an idea that in theory will work, they draft it, they check the figures…all theoretically…and then they announce it. No-one asks much because it takes time and it costs money.
If we are to accept this is the way things are done, we have to welcome that each policy announcement is in essence an opportunity to protest/consult/lobby as interested parties and members of the public. When they then change their mind based on that, in what is likely to be the first chance they’ve had to actually get feedback, we should thank them for it, cautiously.