“IT MUST be borne in mind,” Britain’s chancellor of the exchequer told the House of Commons in his budget speech, “that in every case exemption means a relief to A at the charge of B.” This was, indeed, the heart of his case for taking away a tax break that benefited charities. “It is not fair”, he went on, to impose the cost of the exemption, in the form of higher taxes, on “the fathers of families, men labouring to support their wives and children.” This was all the more important because the gifts encouraged by the exemption were largely designed to bring a wealthy donor “credit and notoriety” which “otherwise he might not have enjoyed.” William Gladstone failed in this attempt to end the exemption of charities from income tax in 1863. He would not have been surprised when his successor, George Osborne, last week backed down on a more modest attempt towards the same ends. In his March budget Mr Osborne proposed a cap on the sum that rich people can deduct from their taxes thanks to their charitable donations, framing it as part of a strategy to crack down on wealthy tax dodgers. Britain’s charities took up their cudgels, arguing that reducing the tax break would diminish donations and thus their ability to do good works. Charities are, by and large, more popular than chancellors. On this occasion, they protected their privileges, as they did in the 1860s (when, though the
Times thundered at Gladstone for his “perverse boldness”,
The Economist approved of his plan: see
footnote).
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