Finance: Outlook - The Budget we won't be seeing (yet)

Professor Paul Palmer offers an alternative Budget plan to assist the voluntary sector.

You are likely to be reading this article on the morning of the Budget. It explores what, from the point of view of charities, is unlikely to be in the Budget - not this year, anyway.

Taxing issues

First, there is VAT exemption. The VAT argument seems to have become somewhat lost - in part because of European issues, but also because the sector has done itself no favours by sending out confused messages on how much it is talking about.

The answer might be for the Chancellor to set up and fund an independent body - with me as chair - to properly research and cost the issue. This, however, is unlikely.

Next, there are income tax allowances. Should trustees who give their time pro bono receive added income tax allowances? Diversity is a current buzzword, but the one group I see missing from trustee boards is people of working age. So would enabling such tax allowances actually make a difference, given that so few trustees would qualify for them?

If it was introduced, could such a scheme extend to offering corporate tax relief, encouraging companies to give staff, say, one day off a month to participate in charitable governance activity?

What services should the Government deliver directly through taxation?

And what could be better delivered by charities, offering a greater choice to the public through, say, a voucher system? At the moment, we have a haphazard and ad hoc back-door system that leads to confusion over both accountability and funding.

The Public Guardianship Office is a prime example of a state service that a charity, with experience of looking after the affairs of vulnerable people, could do better.

This service, run by the Department of Constitutional Affairs, was created to safeguard the business of those unable to look after their own finances.

It has, however, been pilloried for both inefficiency and a complete lack of sympathy for its clients.

The Government should set up an independent commission to review who provides all government services, including schools and the health service.

Before we get too carried away, however, let us remember that one person's tax relief is another person's tax burden. Given that Gordon Brown is approaching this Budget with his hands somewhat tied and his next-door neighbour unlikely to develop radical tendencies, it is unlikely that he will be offering many handouts of the type identified above.

Perhaps, though, he might consider some or all of these proposals as a set of longer-term objectives.

Paul Palmer is professor of voluntary sector management at the Sir John Cass Business School, City University


- An independent, but government-funded, body to research and cost the issue of VAT exemption

- Income tax allowances for trustees who give their time pro bono

- Corporate tax relief for companies so staff can take time off for charitable governance activities.

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