Tax relief for charitable donation

The purpose of tax reliefs on charitable donations is intended, in part, to limit abusive tax avoidance, but there are points of principle to consider. Whenever tax relief is given, the state is foregoing the tax revenue it could otherwise claim; effectively, the charity is receiving money that would otherwise have gone to the government. Charities are already exempt from a range of taxes, particularly council tax and water rates. Charities which raise money by asking people to declare that they are are taxpayers are effectively seeking – and receving – government subsidy. The idea that this is “free” money is illusory.

The support of “philanthropy” by tax relief effectively means that people are able to give money to charities in lieu of giving it to government – a situation which puts individual preference in place of collective decision making. What a phalanx of very rich “philanthropists” are demanding is that they, not the government, should be able to determine how their tax liabilities are spent. The US Government accepts that demand, unreasonable as it is, and the US functions consistently with the federal government in deficit as a result. Most European governments would not tolerate it, and they should not.

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