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Saturday, 25th June 2011

Tax versus philanthropy 

Fraser Nelson 9:45am

I was on the panel of Any Questions last night in Saltaire, the most beautiful town I’ve seen outside of the Highlands. Jonathan Dimbleby always warms everyone up with a test question, which lets the panelists make their mistakes early. The first question was this: the town of Saltaire was founded by a philanthropist, Sir Titus Salt. What can be done to make today’s rich pay their fair share?

Lucky for me that it was not recorded, because I went on for ages. Sir Titus was living in an era before the welfare state, where welfare was provided voluntarily, by people in the community. Had he been alive today, the government would be confiscating 52 per cent of what he earned – thanks to George Osborne’s recently increased tax. Would he be inclined to give so much? Or would he conclude that it was the government’s job to pay for the poor, and that he had paid richly to do so?

More government means less community. The horizontal ties, which bind people to each other, have slowly been replaced with vertical ties, which seek to bind individuals to the state. Society is weakened by this, because the government does a very bad job. And high taxes undermine philanthropic intention, and community action. The sheet vanity of politicians blinds them to the destructive effect of their interventions. Sir Titus built beautiful stone houses for his mill workers (where there was, until five years ago, not even a pub). The government shovels the poor in high-rise welfare ghettoes riddled with crime and drug abuse. The result is this very British phenomenon: expensive poverty.

In my more optimistic moments, I would say that David Cameron understands all this. The “Big Society” agenda is explicitly aimed at replacing bad government-run programmes with effective community-based action. Cameron sounds as if he seeks to nurture and repair these horizontal ties, making our society – and, ergo, our nation – stronger as a result.

But then comes my other iron rule in politics: judge politicians by what they do, not what they say. Let’s look at another area where Britain is a world leader: global philanthropy. The average Brit gives more in overseas aid than anyone else in the world save for those famously generous Americans. It’s a proud tradition that goes back generations: we have always cared about the welfare of people whom we shall never know, in far-flung corners of the world. As we say in Scotland, we’re all Jock Tamson’s bairns. These are, if you like, globally horizontal ties. The Big, Global Society (BGS). And in Britain, I’m proud to say we specialize in them.

But the Big Global Society is now under threat: from David Cameron’s government. He is about to increase tax, in the process of doubling the international aid budget, a levy averaging £500 per household – taken by the taxman, on pain of imprisonment, and given to a charity of the Prime Minister’s choice. They may be good charities: last week we had GAVI, the immunization fund. Or they may be charities pursuing unwise causes: DfID’s number one destination country is India, which has its own space, nuclear and international aid programmes. Britain may disagree with how the Indian government allocates its budget, but we surrendered the right to influence this in 1947.

A poll last week by YouGov showed what I always suspected: that a quarter of Brits say they are less likely to give money to overseas charities as a result. The end result could very well be that Britain, as a country, gives less to overseas aid because the halo-seeking politicians sought to muscle in and do themselves what people have been doing as communities for ages. It is the very opposite of the Big Society message that David Cameron claims to believe in.

I doubt the Prime Minister has looked at British overseas donations and thought ‘that’s not enough’. In fact, I doubt that he has ever been given the figures on our world-class private donations, or worked out that Britain – as a country – already gives 0.7 per cent of GNI.

Government won’t tell him this, because government is institutionally blind to individual philanthropy. It vainly wants to do all the social stuff itself. Cameron himself has spoken about what “Britain” gives in overseas aid when he refers only to how much tax money his government gives. As a great politician once said, there is such a thing as society. It’s just not the same thing as the state.

Filed under: Aid (40 more articles) , Big Society (120 more articles) , Charity (37 more articles) , David Cameron (1913 more articles) , Government (233 more articles) , International development (69 more articles) , Media (447 more articles) , Society (94 more articles) , UK politics (5407 more articles) , Whitehall (136 more articles)

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Comments Post comment

DavidDP

June 25th, 2011 10:15am Report this comment

You do, of course, ignore the issue of soft power. But then you need to for your hypothesis to hold.

Perry

June 25th, 2011 10:40am Report this comment

the halo-seeking politicians

You accurately hit the target there Fraser.

And the H2B, the current most compulsive halo-seeking politician is trying to emulate his idol in the glam league of cod philanthropists. But unlike Sir Titus, he uses OUR MONEY!!

However, he is hopelessly out-of-touch, regardless of how much lis-ten-ing he - or rather his PR machine – have done so far.

Depressing times.

BTW the only ‘charities’ I give to now, willingly and with great pleasure, - are the Belgium Trappist Monasteries.

Frank P

June 25th, 2011 10:48am Report this comment

Rather a prolix way of saying what many of us here have been saying for some time: that we're being robbed blind to fund dubious causes overseas by a government that is broke - but still wants to spray around largess at somebody else's expense in order to enhance their political reputation - abroad! It's criminal - but you failed to mention that in your haste to highlight Scottish altruism, which hitherto has been buried in the more accepted (and probably justifiable) reputation of tight-fistedness.

Titus Salt

June 25th, 2011 10:48am Report this comment

Glad you enjoyed your visit to my home town Fraser.

As you say, statist government has nationalised philanthropy like it nationalised everything else. And it's going exactly the same way as Britain's aircraft, motor and steel industries.

denis cooper

June 25th, 2011 10:56am Report this comment

I couldn't really give much less to overseas charities than I do now, because I stopped supporting Oxfam, Save the Children etc about 30 years ago when it dawned on me that their activities were in fact creating more problems for the future.

That was when the world population had risen from 3 billion in 1960 to about 4.5 billion and was carrying on up - about 7 billion now, heading for 9 billion in another 30 years - and almost all of that population growth was in poor countries and was being actively assisted by the misguided charities I'd been naive enough to support.

So it came down the Salvation Army - until some idiot at the top rhapsodised about the EU and it got suspended from my list of acceptable charities - and lifeboats and some similar very specific domestic charities.

I can't say how angry I am that having taken that conscious decision not to support charities which were encouraging population growth in poor countries, so making it more difficult for them to lift themselves out of poverty and moreover increasing the pressure for unwanted immigration into my own country, I now find this sanctimonious self-righteous bastard Cameron insisting that I must contribute under threat of imprisonment.

David Price

June 25th, 2011 10:57am Report this comment

I am generally willing to give the government, and Cameron, the benefit of the doubt. There are a lot of things I disagree with, but I'm prepared to say, 'well, maybe there's something we don't know which is causing them to help bail out Ireland, support the Euro, cut the defence budget so much', etc., etc.

But there is simply NO explanation, whichever way I look at it, that justifies us being "an aid superpower", or whatever the minister described us as last week. I just think it is WRONG. I fear it plays to the vanity of politicians and the 'luvvie' circuit, where they can fly around the world pretending to be big players, when this profligacy merely speeds our descent into the B league...

A lot of the government's bad decisions - green taxes, no referendum on Europe (even though we were all supposed to turn up to vote for something as monumentally irrelevant as AV), retiring the Harriers, etc., were things I can just about reassure myself are because they're in the coalition with the LibDems. If they get a second term, by themselves, I tell myself, they'd do it differently...

But foreign aid? They seem to be really happy and proud about this - and this worries me. It's more about themselves as a political class sponsoring their political class all around the world.

We need lower taxes here - and a more thriving charity sector. Government shouldn't simply 'sub' charities, no matter how deserving they are. Because then they're no charities anymore, are they - they're NGOs.

strapworld

June 25th, 2011 10:57am Report this comment

But, Mr Nelson, Cameron is like all deluded politicians. He actually believes HE is giving the money to these places. Great when you have such an almost bottomless pit of taxpayers money to throw away, be it on wars in Libya (he so described it as such!) or futile aid to foreign countries.

I heard on the radio this morning that a charity that gives food to the poor in our country has seen a massive increase in requests for such aid.

Now who said that charity begins at home?
Sir Titus Salt like Cadbury like so many others saw the need to help those less fortunate than themselves and did so.

Politicians created the welfare state and now they have seen the real damage that that has done, to both people and the country, but haven't the guts to face up to it. I am sure the Duncan Smith proposals will face a massive U turn shortly.

Thought you did well last evening. I wish Dimbleby, like his brother, would just shut up. It may make the programme more interesting.

alan campbell

June 25th, 2011 11:00am Report this comment

The wildest optimism that the spivs and speculators unleashed by Mrs T in the 80s would have any interest in philanthropy. As for the disincentive effect of tax rates - the richest avoid tax anyway.
Dreamworld.

TrevorsDen

June 25th, 2011 11:03am Report this comment

There is nothing new in saying he we (generally) spend our own money more wisely than the government spends it for us.

However its worth reminding us about the savage mess that architects town planners and social engineers have made of our society with their high rise tenements.

Mr. Bubbles

June 25th, 2011 11:04am Report this comment

It's what politicians do best afterall; spend other people's money. Blue or red, they're clearly both addicted to it, but I must admit it does get the blood boiling more when the Tories do it, and on such a ridiculously misguided policy as well. *sigh*

Nicholas

June 25th, 2011 11:20am Report this comment

Ah, yes. "Soft power". Another mutation of Marxism that draws on tenuous historical precedent to legitimise its fairly recent arrival. The tentacles stretch to such "interpretations of leadership" as Common Purpose, NGO's and all the other "coercive but pretending not to be" apparatus of the intervening socialist state which provides such a lucrative, tax-funded income and life-style for so many of our socialist elite.

Q.v. also Delingpole on "commutarianism" in this week's Speccie.

PS alcazar to save you sneering - yes, it's a rant.

strapworld

June 25th, 2011 11:32am Report this comment

Trevors Den, Well done. No insults. And, I do not mind saying so, I totally agree with you.

Keep taking the medication, it is working!

Tiberius

June 25th, 2011 11:32am Report this comment

You've missed a bit out, Fraser.

Since devolution with its awful consequences, foreign aid has (for this Englishman at least) included the settlement that goes to Scotland.

For Indian space programme, read free prescriptions, free geriatric care, and the overtly racist free tertiary education system.

oldtimer

June 25th, 2011 11:48am Report this comment

I no longer give Cameron the benefit of the doubt. My local Conservative candidate got my vote purely as a personal one (as I wrote to advise him at the time). Recently I wrote to him again to say he would not even get it on that basis given what Cameron both says and does now he is in office. The Aid budget is one element in that. His obsession with implementing the Climate Change Act is the other. Both inflict needless costs on the UK population on the basis that Cameron knows best. He does not. The cost of these two Cameron self indulgences must be getting close to £1000 per family per year.

He, like the other party leaders, needs to be removed by his own party before he does yet more irreperable damge to the UK.

As for donating to charity, I only do this for charities outside the orbit of government`s favoured charities and where I choose to put my money (what is left of it).

Dave B

June 25th, 2011 12:04pm Report this comment

I think if charitable donations were tax deductible for the donor it could boost donations, even with our current tax load.

(As I understand it, recipients can reclaim income taxes donors have paid on donations, but donors must treat charitable donations they make as income received, and pay tax on it.)

Dave B

June 25th, 2011 12:53pm Report this comment

@FraserNelson
Article suggestion. Could Coffee House/The Spectator perhaps have an article on how UK tax law supports/inhibits charitable donations?

Vicki Woods did one for The Telegraph, but it's light on details.

http://www.telegraph.co.uk/comment/columnists/vickiwoods/8289776/We-could-use-some-US-style-philanthropy.html

Terry Arthur

June 25th, 2011 1:14pm Report this comment

Many congratulations to Fraser Nelson for this.
It's a pity that it wasn't in the magazine itself. I spent months trying to find a mainstream outlet for my own similar article. It was eventually published last November on the blog section of the IEA at
http://www.iea.org.uk/blog?tag=89

pharbitis

June 25th, 2011 2:37pm Report this comment

denis cooper and oldtimer - yes yes YES!

£500 of my household tax to polish the Bullingdon Boy's halo in giving it away to countries whose economic migrants we already support here? And whose populations will increase uncontrolled and unsustainably as a result of our aid? More migrants in the future? More mouths to fill?
World population increase and food shortages are the given reason the govt is supporting intensive rearing of cattle and pigs - cloning and massive quantities of antibiotics while our landscape is being ruined with solar panels,pylons and unreliable wind turbines to replace the energy which is being bought up by developing countries to whom we have given Aid.
So it is not just our money Cameron gives away - it's our quality of life on this overtaxed overcowded island.
I don't understand it. Is Cameron looking to lose the next Election so that he can do a Blair more quickly - using the contacts he has made with our money to make a bundle of his own?

Whatever his motives, he's lost my household's vote.

RCE

June 25th, 2011 3:08pm Report this comment

What's the UKIP policy on overseas aid, I wonder?

Dimoto

June 25th, 2011 4:15pm Report this comment

No need to be embarrassed Fraser, nobody with a functioning brain watches the Dimblebore vanity project. (Is "tosh" a Scottish word too ?)

Taken to it's logical conclusion, the India argument applies to most other countries. Why should (say) Mozambique or Congo, brimming with rich farm land, plentiful water and mineral resources, be given money if they refuse to organise themselves ?

But isn't that just another form of statist thinking ? The miserable millions in India are quite unaware of what "their government" chooses to spend it's income on.

David Ossitt

June 25th, 2011 4:19pm Report this comment

“I was on the panel of Any Questions last night in Saltaire, the most beautiful town I’ve seen outside of the Highlands.”

I listened to you on today’s repeat broadcast; you and David Davis came over very well and gave measured sensible answers.

Your opposite number from the New Statesman made a fool of himself, it were, as though he thought he was there to ask the questions and not to answer them and as is now par for the course the labour drone selected for the panel Mary Creagh used the occasion to spout current labour dogma as though reading from a prompt sheet.

As a proud Yorkshire man can I express both my thanks and amazement?

My thanks for your acknowledging the beauty of Saltaire and my amazement that you are so obviously unaware of the fact that Yorkshire has a great many small towns and villages both large and small that are as unique and extremely beautiful.

anne allan

June 25th, 2011 6:57pm Report this comment

Brilliant piece, Fraser. On a practical level, the more of our income that's taken in tax, the less we have to spend ourselves - and that includes giving to charity.
Given the appalling mismanagement of money given to charities working overseas, I had already cut down on donations. Once I learnt that the government was forcibly taking money from my pocket for international grandstanding, I decided that I would not give to any charities involved in foreign ventures. I now only give money to causes that benefit recipients in this country.

ndm

June 25th, 2011 7:03pm Report this comment

Fraser Nelson writes:

-- Sir Titus was living in an era before the welfare state, where welfare was provided voluntarily, by people in the community.

Ah, yes. And life was sweet, so sweet, for the common man. Government grew because private philanthopy was not sufficient to provide a decent life for those at the bottom of the heap.

Of course, much of the wealth accumulated during the Empire was a direct result of the Government largesse in funding an Army and Navy which made international trade possible.

libertarian

June 25th, 2011 7:26pm Report this comment

Dear Alan Campbell

You clearly have never met any of the people you mention and disparage. You clearly no nothing of how people function and what motivates them, you clearly talk drivel. And EVERYBODY avoids tax if they can, including you.

Cynic

June 25th, 2011 9:36pm Report this comment

I donate to charities of my choice. I resent my money being spent on "aid" for dubious projects. I also resent my money being spent on charity when I can't avoid using the service - this morning I noticed my local post van proclaimed "we support Barnados" on the back door. Why should I be obliged to support Barnados too, every time I buy a stamp?

Fergus Pickering

June 26th, 2011 6:36am Report this comment

DON'T support Barnados. One of their main aims is to destroy grammar schools. They are a leftie front.

Maddy1

June 26th, 2011 8:21am Report this comment

Well one of these Dimbleys ponders, if we can save the planet, as he commutes in his Discovery between his town house and country house! The King of Thailand is being accused by the UN. of war crimes in relation to Burmese refugees, and he is being threatened. They do not pressure the Burmese only the Thais for obvious reasons and this how the UN. bullies work. Like our middle class earners bear the brunt of everything, wrong here. Thailand is a country where if you do not work you do not eat. This is the reality, so take. note Consequently everybody works!!! The blind massage bodies etc. The monks do help the really poor. It is the like the easy UN. aid going to the Arabs being currently deposited in Turkey, where the local Turks do back breaking agricultural work. The locals see these Arabs do nothing and still being fed. UN. aid frees a lot of them for terror work as well!Nothing good will become of this. There is a whole culture of entitlement and spin being created. The vegetable seller for instance in Tunisia justed wanted to middleman not dig a fish-farm or break his back in the date palm plantations....plantations.

Cheryl Chapman

June 27th, 2011 11:09am Report this comment

May I just add a little balance before the splenetic rhetoric ruins the excellent points made by you Fraser. As editor of Philanthropy UK, a GOVERNMENT funded project that is committed to supporting more philanthropy and more effective philanthropy, I have to say the government is very interested in individual donations that amounted to almost £11bn in the UK last year, plus £1bn in donations of more than £1m. It has just published a White Paper on Giving and how best to promote philanthropy. It is aware that government can crowd out philanthropy and is therefore stepping back but providing leadership - though many would like to see more tax incentives such as Lifetime Legacies. There are many reasons why people give and many more for why they do not. Whether tax incentives help is a moot point and yet to be proven. Philanthropy is a highly contentious topic. When people do donate they are lambasted as 'tax-dodgers'. When they don't they are considered mean. What would really help - and what the government wants to promote - is a culture of celebrating giving for the rewards it brings both to society and, (yes!), to the giver. Sadly we are burdened by a culture of cynicism that often uses philanthropy as a stick to bang a political drum. Philanthropy is by nature about power, passion, diplomacy, money and, believe it or not, a desire to make the world a better place. A heady and highly subjective mix. Philanthropy will never be a perfect solution or right for everyone. However it is always right to give - the difficult part is how to do so effectively.

Maddy1

June 27th, 2011 12:43pm Report this comment

@Cheryl Chapman
June 27th, 2011 11:09am
a strong economy with vibrant active people, taking pride in their work,and your whole demeaning circus is irrelevant and you are out of work!

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