Thursday, 12 April 2012

Osborne's Charities

George Osborne has been "shocked" by seeing some of the tax returns of the rich. Some of the scoundrels have only been handing over 10% of their income in tax when they should be handing over about 1/3. This leads to two points for George to ponder:

  1. If they are cheating the system and hoarding all this cash then why did he reduce the 50% rate? His argument is that by reducing it to 45% he will induce the rich to invest and so promote growth through their entrepreneurial expertise. Now we can see they were only paying 10% anyway but we haven't been seeing any of this growth George expects. That is because they do not spend their excess income on growing UK PLC. They spend it on luxury German cars, multiple homes and foreign bolt-holes as well as off-shore accounts, in places like say Belize.
  2. How are they using charities to launder their money? Surely there are rules in place to make sure this kind of abuse does not occur. Legitimate charities have actually been badly hit by his recent budget where there will now be a cap on tax relief for donations at 50,000 or 25% of income. This might cost charities up to £1 billion.

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