Good News for… the Rich
The fat cats are purring, as the government has decided to scrap the 50% tax rate for those earning more than £150,000, reducing it by 5%. This cut will benefit some 328,000 people, with these top bracket earners saving annually around £400 million in total. Doesn’t this seem slightly odd given the austerity measures that have been enforced on the rest of the country under this government? A fact that present university applicants are well acquainted with, given the rise of tuition fees earlier this year.
The real irony of the situation is that those who have introduced this tax cut will personally gain from it. Now, I’m not claiming that there are personal motives behind this policy, but it certainly adds salt in the wound knowing that the prime minster and his cronies will be profiting from it. A point hammered home when the Labour leader challenged the coalition leaders, during a debate in parliament, to raise their hands if they would personally benefit from cutting the 50p tax rate – “Just nod if you’re going to benefit from it, or shake your head if you’re not. Come on, we’ve got plenty of time.” Their bashful silence spoke for itself.
Bad News… for Charities
Whilst the rich are getting tax breaks, charities who help the most vulnerable in society are being dealt a blow as recent government proposals may actually put off philanthropists from making sizeable donations. As things stand, high-rate taxpayers are able to reclaim more than half of any donation to a charity in tax but Chancellor George Osborne wants to limit the tax-breaks on donations in order to stop donor’s using their gifts as a way of avoiding tax. Shortly, the maximum amount that can be reclaimed will be £50,000 a year, or 25% of the donor’s income.
Unsurprisingly there has been an outcry from the charities who have warned that this could have a detrimental effect on their funding, especially since they are already having to deal with cut-backs in the money that they receive from the state. The chief executive of the Charities Aid Foundation, John Low has pointed out that, “This is not a ploy to save tax. Philanthropists who make large donations give away far more than they could ever claim in tax relief.” It does leave one questioning whether tackling tax avoidance in this respect is really worth the price tag of hurting charities that help the world’s most vulnerable people.