Treasury urged to prioritise Gift Aid reform

Acevo and others say it is now an urgent necessity

The Treasury should urgently publish concrete proposals for Gift Aid reform in the light of research into the tax break, sector bodies have said.

Research published by the department this week showed that removing the tax rebate that higher-rate taxpayers can currently claim would not significantly affect their giving behaviour.

Ralph Michell, head of policy at chief executives body Acevo, said the research showed there was clear potential for the Treasury to reform Gift Aid to increase the sector's income in a way that higher rate taxpayers agreed with. But he said the key was what happened next.

"The Treasury has its evidence; now it needs to make some decisions," he said. "Acevo is keen on evidence-based policy making, but we are not keen on procrastination-based evidence making."

Michell admitted there were still "issues to be worked through. But the Treasury needs to give us something it is seriously considering we can engage with. If it doesn't, we will have to seriously consider whether it is a good use of charitable funds to keep working on Gift Aid reform."

Jay Kennedy, policy officer at the Directory of Social Change, lamented the "series of non-statements in Budgets and pre-Budget reports" that had came after the original Gift Aid consultation in 2007.

"Considering the state of the public finances, it is easy to see why the Government is not interested in doing anything that might reduce tax revenue," he said. "But Gift Aid transitional relief is set to end in 2011, and everyone expects cuts in public spending that will affect many charities. Some real action on Gift Aid would demonstrate that the Government was serious about supporting charities through a difficult period."

Louise Richards, director of policy and campaigns at the Institute of Fundraising, welcomed the Treasury's promise of further consultation in 2010. But she said she was disappointed that nothing had come of the cross-sectoral campaign for an opt-out system and was not optimistic that any reform would happen before next year's general election.

But John Low, chief executive of the Charities Aid Foundation, said the Government was right to proceed carefully because many difficult issues needed to be ironed out

"We want any changes to simplify the process for both charities and donors," he said. "They must also be long term and sustainable, anticipating any future changes that could affect the amount of Gift Aid that is claimable and the implications for donors such as income tax rates and rules."

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