Thursday, 12 April 2012

The Charity Trap

It's a long time since I posted a blog - because of a combination of being busy writing a book and papers for conferences, and serious illness in the family.

Meanwhile, the crisis in capitalism has spawned many ironies and paradoxes. The latest is this week's row over the coalition government's cap on tax relief for philanthropists' donations to charities. This limit - of £50,000 or a quarter of total income - was explained as a means of clamping down on tax avoidance by some of the super-rich, who used the allowance to reduce their tax contribution to percentages well below those of lower-income citizens, or in some cases to zero.

Now charities and the rich themselves are up in arms, and putting pressure on the Treasury to change its mind. They argue that the measure will undermine the basis for the Big Society to which the government claims to be committed. Very large donations are the lifeblood of many good causes, in culture and the arts as well as the social services, they claim.

So just as we need the plutocracy of the City of London and huge rewards for Directors and executives in the financial sector, our rentier economy needs massive tax incentives for charitable giving, it appears. The austerity programme demands that the super-rich help to pay down the fiscal deficit (that their greed caused through the banking crash), but if the government sends them larger tax bills they will either move their wealth abroad, or stop donating to Big Society volutary services, or both. Oh dear!

This trap has always existed in the USA. In Europe and the UK, welfare states broke out of it by creating public services for which all paid, and from which all could benefit. By reducing reliance on charitable giving by the wealthiest, governments freed themselves to make incomes more equal through progressive taxation, as well as providing for the needs of the whole population, without the stigma of do-gooding services for the poor.

But globalisation has allowed big money and big corporations to break free of welfare states. Now the rich and their companies hold the threat that they will decamp to tax havens or low-tax regimes. When governments - even right-wing ones like the coalition - threaten to block their tax-avoidance schemes, and expose the bogus nature of some of their philanthropy, they cry foul.

The only way to spring the charity trap is to stand firm behind the principle of state responsibility for building a morally justifiable collective infrastructure. Charity, however well-intentioned, can never be a substitute for social justice.

1 comment:

  1. "If you haven't any charity in your heart you have the worst kind of heart trouble" to cure it
    Help people, let's unite for one good cause, be a volunteer"save live"!