Opinion: Let's take the tax battle to the barricades

Nick Cater

Given the mind-boggling complexity of taxation legislation, the voluntary sector is very lucky to have heroic campaigners willing to tackle the injustice that sees UK charities robbed of £400m a year.

When it comes to, yes, the dreaded VAT, those same campaigners are rightly taking the battle to its source, with a conference to be held today and tomorrow (14 and 15 September) in Brussels entitled International Philanthropy: Creating the Right Climate. The event will address the sometimes bizarre ways charities are penalised and constrained by Europe's taxation, and legislation will be scrutinised.

Stepping up the campaign now, both in the UK and across Europe, is good timing and tactics. After all, not only does the UK have the rotating EU presidency until the end of this year, but remember that 2006 is due to see a new "permanent" VAT regime come in.

This will impose an updated framework for the tax that could help or hinder charities across 25 countries, 40 years after it was conceived with no thought of its impact on non-profit groups.

In the UK, one wonders why a Chancellor so keen to grab the social inclusion agenda - from payroll-giving incentives to blitzkrieg volunteering initiatives - fails to deliver on VAT. Despite public denials, does he not want to be seen enriching Eton and its ilk with VAT rebates? Surely the shame of slipping public schools past the public benefit test - another of those "easy exams", like A levels - is long gone.

Or is it the bigger scare stories, that harmonising charity tax laws across Europe into a single charitable market with cross-border tax-efficient giving could, gosh, help foreigners' charities (think of the Daily Mail headlines) or be misused by international terrorists eager to fill in the forms for Gift Aid? Neither bits of spin should put off those who want to put sense back into the tax system.

Meanwhile, as the Chancellor starts preparing his autumn Budget statement, the campaigners are getting even busier.

Today's Brussels conference looks set to launch a pan-European consortium of charities for tax reform, and the UK all-party charities group will help take the fight to Parliament next month.

The voices of charity are getting ever louder on VAT. Are you listening, Mr Brown?

Nick Cater is a consultant and writer: catercharity@yahoo.co.uk.

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