Charity tax: Nick Clegg defends Government plans

THE ROW surrounding the government’s plans on charitable donations intensified today as Deputy Prime Minister Nick Clegg defended plans to cap tax relief.

Mr Clegg insisted there had to be “some limit” to an allowance effectively funded by lower earners.

Amid fury from charities that claim the Budget measure will hit philanthropic giving, the Deputy Prime Minister said he made “absolutely no apology” for changing the tax system so that “everyone pays their fair share”.

His justification for the move struck a markedly different note from that of Chancellor George Osborne, who has spoken of the need to tackle tax avoidance by some of the country’s highest earners.

“I’m not saying people make contributions to charities to avoid tax - of course not, of course not,” Mr Clegg told BBC Radio 4’s Today programme.

“What I am saying is that it is very rare in the developed world to have allowances in your tax system which are completely unlimited.

“There is a simple principle at stake, which is that if you have an unlimited allowance, you are asking ordinary taxpayers on much lower incomes to fund that tax break.”

Mr Clegg said the “centrepiece” of the Budget was the raising of the income tax threshold for basic-rate taxpayers, which he described as “one of the biggest, boldest and most radical changes in the personal tax system for a very long time”.

“I acknowledge that it’s been somewhat lost in some of the coverage of the Budget since it was announced, but the centrepiece remains a huge change in the personal income tax system which will benefit over 20 million basic-rate taxpayers to the tune of several hundred pounds,” he said.

Mr Clegg said that dealing with the 2008 “heart attack” in the economy meant decisions had to be taken now which “generate anxiety and may even generate anger”.

“But at the same time, we are doing things which help millions of people,” he said.