Can Osborne undo the damage done by the charity tax?

With two-thirds of coalition backbenchers opposing the plan, the Chancellor is considering concessio

When George Osborne announced a cap on tax relief in the Budget last month, the so-called “tycoon tax” was supposed to be a populist measure. Under the plans, previously uncapped tax reliefs – including those on charitable donations – would be capped at £50,000 or 25 per cent of income, if higher. Supposed to be a way of clamping down on legal methods of tax avoidance, it clearly it hasn’t quite worked out as hoped, with the government under a hail of criticism for limiting charitable giving.

It appears that the storm is far from over, with a ComRes poll finding that two-thirds (65 per cent) of government backbenchers believe that tax relief on charitable donations should be exempt from the cap. The survey, commissioned by the Charities Aid Foundation, found that 68 per cent of the Conservative and Liberal Democrat MPs surveyed believed that the government should review its proposal to cap tax relief on charitable donations. It also showed that 93 per cent of coalition backbenchers believed that the government "should do all it can to use the tax system to encourage charitable donations from wealthy donors".

So what next for the policy? The government is still scrambling to regain some political points, with the Treasury releasing figures that reveal the extent of tax avoidance among the super-rich. The figures show that almost a thousand UK taxpayers earning over £1m a year are paying less than 30 per cent of their income in tax, while 12 of the 200 taxpayers earning over £10m are paying less than 10 per cent in tax. The figures are supposed to show how the super-rich are using tax reliefs and legal schemes to reduce the amount of tax they pay.

The numbers are certainly shocking, but at this point, probably not enough for the government to regain control of the message. Indeed, the Financial Times reports that Osborne is considering changes to the proposals, although as yet he is resisting pressure to exempt donations from the cap completely. Two proposals are reportedly under consideration. The first is to create a separate limit on charitable donations of 50 per cent of a person’s income, which would allow charities to claim tens of millions extra in tax relief than the current plan. Such a move would cost £40m, hugely reducing the amount saved by capping charitable donations, to just £20m. The second is to allow donors to roll over any unused tax reliefs into future years if they are used for donations.

Hot on the heels of the furores over pasties, granny tax, jerry cans, and email surveillance, this is yet another example of poor communication and media strategy from the very top of the coalition. With several papers this morning calling for David Cameron to improve his team, this latest incident only serves to cement the impression of a government that acts before it thinks.
 

George Osborne is considering concessions to his planned cap on charitable donations. Photograph: Getty Images

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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How the Standing Rock fight will continue

Bureaucratic ability to hold corporate interest account will be more necessary now than ever.

Fireworks lit up the sky in rural North Dakota on Sunday night, as protestors celebrated at what is being widely hailed as a major victory for rights activism.

After months spent encamped in tee-pees and tents on the banks of the Canonball river, supporters of the Standing Rock Sioux Tribe finally received the news they’d been waiting for: the US Army Corps has not issued the Dakota Access pipeline with the permit it requires to drill under Lake Oahe.

“We […] commend with the utmost gratitude the courage it took on the part of President Obama, the Army Corps, the Department of Justice and the Department of the Interior to take steps to correct the course of history and to do the right thing" said a statement released by the Standing Rock Sioux tribe’s chairman, Dave Archambault II.

With the camp’s epic setting, social-media fame, and echoes of wider injustice towards Native Americans, the movement has already earned a place in the history books. You can almost hear the Hollywood scriptwriters tapping away.

But as the smoke settles and the snow thickens around the thinning campsite, what will be Standing Rock’s lasting legacy?

I’ve written before about the solidarity, social justice and environmental awareness that I think make this anti-pipeline movement such an important symbol for the world today.

But perhaps its most influential consequence may also be its least glamorous: an insistence on a fully-functioning and accountable bureaucratic process.

According to a statement from the US Army’s Assistant Secretary of Civil Words, the Dakota Access project must “explore alternate routes”, through the aid of “an Environmental Impact Statement with full public input and analysis”.

This emphasis on consultation and review is not big-statement politics from the Obama administration. In fact it is a far cry from his outright rejection of the Keystone Pipeline project in 2015. Yet it may set an even more enduring example.

The use of presidential power to reject Keystone, was justified on the grounds that America needed to maintain its reputation as a “global leader” on climate change. This certainly sent a clear message to the world that support from Canadian tar-sands oil deposits was environmentally unacceptable.

But it also failed to close the issue. TransCanada, the company behind Keystone, has remained “committed” to the project and has embroiled the government in a lengthy legal challenge. Unsurprisingly, they now hope to “convince” Donald Trump to overturn Obama’s position.

In contrast, the apparently modest nature of the government’s response to Dakota Access Pipeline may yet prove environmental justice’s biggest boon. It may even help Trump-proof the environment.

“Although we have had continuing discussion and exchanges of new information with the Standing Rock Sioux and Dakota Access, it’s clear that there’s more work to do”, said the Jo-Ellen Darcy, the Army’s Assistant Secretary for Civil Works.

Back in July, the same Army Corps of Engineers (which has jurisdiction over domestic pipelines crossing major waterways) waved through an environmental assessment prepared by the pipeline’s developer and approved the project. The Standing Rock Sioux Tribe subsequently complained that the threat to its water supply and cultural heritage had not been duly considered. This month’s about-turn is thus vital recognition of the importance of careful and extensive public consultation. And if ever such recognition was needed it is now.

Not only does Donald Trump have a financial tie to the Energy Transfer Partners but the wider oil and gas industry also invested millions into other Republican candidate nominees. On top of this, Trump has already announced that Myron Ebell, a well known climate sceptic, will be in charge of leading the transition team for the Environmental Protection Agency.

Maintaining the level of scrutiny finally granted for Standing Rock may not be easy under the new administration. Jennifer Baker, an attorney who has worked with tribes in South Dakota on pipeline issues for several years, fears that the ground gained may not last long. But while the camp at Standing Rock may be disbanding, the movement is not.

This Friday, the three tribes who have sued the Corps (the Yankont, Cheyenne River, and Standing Rock Sioux Tribes) will head to a hearing before the Inter-American Commission on Human Rights, seeking to increase pressure on the government to comply with both domestic and international law as it pertains to human rights and indigenous soveriegnty. 

What the anti-pipeline struggle has shown - and will continue to show - is that a fully accountable and transparent bureaucratic process could yet become the environment's best line of defence. That – and hope.

India Bourke is an environment writer and editorial assistant at the New Statesman.