Cautious welcome to tax sweetener

by Jack O'Sullivan THE expected post-Budget bonanza in charitable donations, following possible tax concessions on giving, has been broadly welcomed by Catholic charities. But it is unlikely to help them significantly in the short term.
Most rely for their income on individual rather than corporate donations. Government sources suggest that the concessions on March 18 will be limited to companies, few of whom are likely to give to Catholic institutions.
The changes are not expected to totally mirror the American system, where any contribution to a charity by an individual or company is "tax deductible".
Rather they will merely allow companies to cut profits liable to tax by the size of their annual charitable donations.
Cafod said this week that its income (£11.8 million last year) would not be much effected. The same message came from the Catholic Housing Aid Society and smaller Catholic charities, which do not appeal much to the company sector.
But such institutions could see a big increase in donations if, as is being discussed in a working party, tax concessions are extended in a few years time to individuals.
There might be some loss of covenant income as individuals preferred to defer their donations against their tax bills rather than let charities claim a rebate from the Inland Revenue.
But Patrick Collins of the Catholic Childrens' Society said this week: "If it was going to encourage companies and individuals to make larger donations, I think we would gain on the swings rather than lose on the roundabouts."
Michael Brophy, Director of the Charities Aid Foundation, estimates that charities could expect to double their current income of £500 million a year in voluntary cash contributions under such a reformed tax regime.
Such a change could also provide a financial boost for feepaying Catholic schools. Public schools are registered charities.
Members of the Government are known for some time to have wanted to give tax concessions to parents paying school fees. Reform of the charity tax laws would be one way of granting such aid.
But many organisations such as Pax Christi and Amnesty International would not benefit from the concessions, since they are not registered charities.
Robina Rafferty of CHAS warned this week that proposed charity tax changes might also be of little benefit to less popular concerns such as the single homeless. "They would not remove the need for grant aid from central and local government. We would not like them to be seen as a substitute for government activity", she said.