Tax breaks proposed to coax rich donors

Labour party chairman Hazel Blears has called for new tax incentives to encourage charitable giving by the wealthy.

Blears, a candidate in Labour's deputy leadership election, told the Financial Times that wealthy businessmen and higher earners should be rewarded for donations to good causes.

"Say you wanted to invest in sports facilities or arts - in other countries there's a much more widespread system of people funding things like drama, art: those parts of life," she told the paper. "That seems something you could look at. You could put more tax incentives into the system to encourage people to give more."

Under Gift Aid, higher rate taxpayers can already claim a tax refunds of 18 per cent of charity donations. But Blears is thought to be advocating more generous incentives.

She was responding to calls from other Labour leadership contenders for tax increases on the rich. But Blears said she opposed "punitive levels of taxation".

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