Charity tax: Ed Balls accuses Government of ‘cobbling together’ policy

PRESSURE on the Government to scrap its controversial plans to put a cap on tax relief for charitable donations increased today when the Shadow Chancellor Ed Balls described the idea as “cobbled together at the last minute”.

Mr Balls said the “massive outcry” over the move came at a time when charities are already suffering as a result of spending cuts and the economic downturn.

Speaking on ITV, the Shadow Chancellor said: “If you cobble something together at the last minute and you don’t think about it, you don’t talk to the charities, you don’t talk to the Charity Commission, it all falls apart.

“In this Budget, there have been so many things - caravans, pasties, pensioners’ tax rise, charities - where the Chancellor doesn’t seem to have thought it through in advance. Now it is a mess, really.

“At the moment out there, there are cuts to local services for elderly people, for children, and it is hospices who are saying we are going to lose funds, it is Macmillan nurses, lots of charities, saying at just the moment when our services are under pressure any way from public spending, they are now going to take away money from charities.

“What is so difficult is that the Government cut taxes for the richest people but they are taking the money away from the charities. Where is the fairness in that?”

His comments came after the Prime Minister David Cameron indicated that he is ready to reduce the proposed cap. He also said he would take time to listen to critics of the scheme and take the time to ensure the Government got it right.

Mr Cameron said he wanted to see more philanthropic giving to charities - something a Treasury minister conceded would fall under the plans announced by Chancellor George Osborne.

A full consultation is to be held over the summer on George Osborne’s policy, which would see a limit on a range of income tax reliefs of £50,000 or 25 per cent of income, whichever is the greater.

The Treasury has said the move, announced in the March Budget and due to be introduced through the 2013 Finance Bill, will crack down on wealthy individuals who use reliefs to minimise their tax contribution.

It released figures showing that 6 per cent of £10 million-plus earners paid less than 10 per cent in tax and another 3 per cent came in below the basic 20 per cent rate. Fewer than three-quarters paid more than 40 per cent.