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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Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland