Charities Taxation

Oral Answers to Questions — Treasury – in the House of Commons at 12:00 am on 25th June 1998.

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Photo of John Bercow John Bercow Conservative, Buckingham

What representations he has received regarding the taxation of charities. [46158]

Photo of Dawn Primarolo Dawn Primarolo The Financial Secretary to the Treasury

There has been an excellent response to the first phase of the review of charities taxation. We expect to publish a consultation document shortly.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Trade and Industry)

Yes, but, as the Treasury is fond of the long term, will the Financial Secretary concede that hard-pressed charities feel that they will have a long wait to know what will happen to them in the long term? Will she now at last concede that the compensation payments were offered to charities on a degressive basis against the loss of their dividend tax credits, and are a reflection of the damage that the Chancellor's proposals have already inflicted on the income of the charities sector?

Photo of Dawn Primarolo Dawn Primarolo The Financial Secretary to the Treasury

No, I certainly do not agree with the hon. Gentleman. As he well knows, the charities have been trying to persuade Governments for some time to undertake a comprehensive review of both direct and indirect taxation and the way in which it impacts on their ability to contribute to our society.

The Government have received more than 3,500 responses. It is important that we consider all of them and that the consultation document offers charities the proposals that they are looking for so that they can plan for the long term a system that is simple and easy to operate, and respects their contribution to society. Charities already receive direct and indirect relief of more than £1.8 billion from the Government, and the compensation to which the hon. Gentleman refers was very generous indeed.

Photo of John Bercow John Bercow Conservative, Buckingham

The Financial Secretary's reply to my hon. Friend the Member for Daventry (Mr. Boswell) will be a grave disappointment to thousands of charities the length and breadth of the United Kingdom. Why is the hon. Lady not prepared to commit the Government, when the formal period of transitional relief has come to an end, to the provision of some sort of continuing relief from which charities can benefit? If she is not prepared to make that commitment on the Floor of the House this afternoon, why does she not simply go away and rethink the unwarranted £400 million tax hit on the charities sector introduced by her Government?

Photo of Dawn Primarolo Dawn Primarolo The Financial Secretary to the Treasury

The hon. Gentleman is out of touch with the charitable sector, which has widely welcomed the Government's review of both indirect and direct taxes and how they impact on charities. Far from being gravely disappointed, charities welcome the fact that there is now a Government who recognise the contribution they make to society and who are prepared to make plans with them for the long term.

Photo of John Home Robertson John Home Robertson Labour, East Lothian

Will my hon. Friend reflect on the fact that some charities are a great deal more charitable than others? As a survivor of the private education system, may I suggest that it is impossible to justify the current scale of tax advantages made available to schools whose main objective is to maintain the class system in this country?

Photo of Dawn Primarolo Dawn Primarolo The Financial Secretary to the Treasury

My hon. Friend is quite right to identify the vast range of charities and charitable activity. What is important is that the review recognises that charities make a contribution, treats them fairly, and provides a tax system that will suit their needs into the next century, instead of one that matches what the previous Government thought their activities should have been in the last century.

Photo of Michael Fallon Michael Fallon Conservative, Sevenoaks

Why should charities have to pay more tax to compensate for the Government's failure to control welfare spending? Has the hon. Lady seen the correspondence from the Thalidomide Trust, which has written to her about the £75,000 it lost through the withdrawal of tax credits last year, because Ministers drew up the compensation scheme so narrowly that they excluded the mixed funds in which the trust had invested?

Photo of Dawn Primarolo Dawn Primarolo The Financial Secretary to the Treasury

In case the hon. Gentleman missed the point I made earlier, I shall repeat it: charities received £1.8 billion of tax relief from the Government. The compensation scheme that was established is generous, and lasts for five years. The hon. Gentleman should turn his mind to ways in which to support the Government in their proposals to provide a secure base for charities, instead of trying to make cheap points at their expense.