Dame Judi Dench and Maureen Lipman became the first celebrities to speak out on the issue of the sector's £500m VAT bill.
"I don't think the Government should charge charities VAT," said Lipman.
"It was originally intended to be a tax on luxuries, and charitable work isn't a luxury."
Dench, a patron of learning disability charity the Home Farm Trust and council member of VSO, said: "I was horrified to learn that £700,000 of the money raised by the Home Farm Trust is lost to the taxman as a result of VAT. Government shouldn't seek to profit from the fundraising activities of charities, particularly where they are helping to provide vital public services."
She called for a compensation scheme for charities that cannot recover their VAT.