Why I’m sticking up for the Taxpayers’ Alliance. Sort of.

Today’s Guardian is full of righteous indignation about the allegation that the Taxpayers’ Alliance has set up a charitable arm to claim Gift Aid on donations from wealthy backers, Tory tax allies ‘subsidised’ by the taxpayer:

A campaign group which claims to represent the interests of ordinary taxpayers is using a charitable arm which gives it access to tax relief on donations from wealthy backers, the Guardian has learned.

The Conservative-linked Taxpayers’ Alliance, which campaigns against the misuse of public funds, has set up a charity under a different name which can secure subsidies from the taxman worth up to 40% on individuals’ donations. In one example, Midlands businessmen said they channelled funds through the Politics and Economics Research Trust at the request of the Taxpayers’ Alliance after they asked the campaign group to undertake research into policies which stood to damage their business interests. The arrangement allowed the Taxpayers’ Alliance to benefit from Gift Aid on the donations, a spokesman for the donors said.

Sorry to disappoint, but I’m not going to join in the criticism of the Taxpayers’ Alliance, even if it is politically convenient to attack a right-leaning think-tank.

For a start, that the TA has a registered charitable arm is by no means unusual – for example, the Lib Dem-leaning think-tank Centre Forum is also able to benefit from charitable donations. Indeed, on their donation form, you can see quite clearly that it’s possible to Gift Aid any contribution you choose to make to Centre Forum.

Given that the TA is by no means alone in utilising charitable status, then, what’s the Guardian’s beef? Well, beyond the fact that its a right-wing organisation, the Guardian’s innuendo can be summed up in their line that ‘tax accountants [have] warned it could breach charity law, which states that organisations may not be charitable if they have political purposes.’ True enough, though the Guardian adduces no evidence that the TA has crossed the line separating research from campaigning.

The bigger issue – and, yes, there is a bigger issue than ‘Lefty broadsheet attacks Right-wing think-tank': cue political blogosphere adopting tribal pro/anti positions – is this: that donors to political organisations should, in my view, be able to receive taxable benefits equivalent to those gained by donating to charity.

And it’s not just me who says this: in 1998, the Committee on Standards in Public Life, under the chairmanship of Lord Neill of Bladen, made exactly this recommendation, though it was rejected by Labour, the Government arguing that, ‘A tax-relief scheme would be expensive for the Inland Revenue [losing tax revenue of up to £5m a year] and political parties to administer relative to the likely level of take-up.’

State funding of political parties was never likely to find popular favour: the row over MPs’ expenses has put paid to it for at least a generation. But the democratic party political system – policy development and campaigning – has to be paid for somehow. I believe government has a role to play in encouraging more citizens to get involved in our democracy, and that includes encouraging all of us to help pay for the party political work which underpins it. Better, in my view, that citizens be able voluntarily to show their financial support for political causes, than for it to be made compulsory through state funding.

After all, in donating to a political party I’m voluntarily giving my money away, putting my money where my mouth is, because I believe that my chosen party will help to make for a better society. Just as do donors to Greenpeace, Amnesty International, and even, dare I say it, the Taxpayers’ Alliance.

PS: the headline to my article says I’m sticking up for the Taxpayers’ Alliance – ‘sort of’. Here’s the reason for my qualification. If you, as an ordinary citizen, wish to donate to the TA you can visit this website page – which, instead of giving you the opportunity to Gift Aid your donation (and so increase its value by 28%, or 40% if you’re a higher-rate taxpayer), as the TA’s wealthy donors are apparently able to do – merely directs you to a bog-standard PayPal option. If it’s possible to support the charitable activities of the Taxpayers’ Alliance, then that option should be open to everyone – not merely the richest by application only.

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9 Comments

  • Malcolm Todd 21st Dec '09 - 4:00pm

    Except that if you espouse the philosophy of the Taxpayers’ Alliance – that taxes are too high and should be reduced – then there’s no problem with a system that, in principle, reduces the amount of tax that an individual pays in order to allow them to give it to causes that they believe in. Personally, I think that’s a bollocks way of looking at the Gift Aid system, but it’s not really inconsistent with the TA’s general philosophy. (Of course, if they’ve ever objected to Gift Aid as such, or other tax reliefs, that’s a different matter.)

  • The problem with the “Taxpayers’ Alliance” is that it calls itself the Taxpayers Alliance. It isn’t. It’s a right wing pressure group funded by a tiny number of rich people.

  • Of course we all know that the Guardian wouldn’t do anything offshore to offset its tax liabilities don’t we, don’t we?

    @ Mark Wright,

    Total nonsense

  • John Prescott has written to complain about this to the Charity Commission. I imagine that the Fabians will be mightily upset if he is successful.

    Personally I see no reason why any donations to any cause should get a tax break – effectively you are forcing others to subsidise your chosen way to spend your money. If a rich person gives £600k to a think tank, taxpayers have to chip in £400k. Why? I want my taxes to be spent by the democratically elected government, not dictated by the decisions of (generally rich) individuals.

  • Surreptitious Evil 22nd Dec '09 - 8:50am

    Tim,

    You are missing the whole point of “Gift Aid” and other forms of tax relief. It is not your tax money – it is that rich person’s. You can only claim tax relief to the amount of tax you pay yourself. Bringing the giver to the situation where they are effectively giving from pre-income tax (but not pre-NI) money. Look at the various “Give As You Earn” schemes, for examples available to all on the charity side and pension contribution tax relief for personal benefit.

    Now, if you are saying that tax reliefs, sundry and multi-various, should not exist for anybody, then that (like any attempt to simplify the tax system) is a good debating point – the problem comes when you start looking at tribal favourites within the horridly complex system.

    Stephen,

    Even if the TA don’t allow direct claim of Gift Aid through PayPal, you can still get the benefit by making a Gift Aid declaration to them or simply by reclaiming the tax on your tax return. Which, actually, is the way people on higher rate tax get the full benefit – HMRC generally don’t allow charities to claim the full 40% tax relief on general donations, no matter how rich the population of donors are (they may allow this for specific one-off large donations – I am neither a tax accountant nor a charity manager …)

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