KEY POINTS:
National's new leader, John Key, is fast establishing a reputation as someone who gets things done, which is never easy in Opposition. In his first major speech he challenged businesses to help provide food and sports equipment to schoolchildren in deprived neighbourhoods. While the Prime Minister and others were chipping at his incursion on Labour's territory, Mr Key was busy with firms responding to his call. Tasti Foods donated 100,000 snack bars to the KidsCan organisation. James Crisp Ltd donated 100,000 boxes of raisins.
Mr Key is promoting the idea that we should not look to the Government for everything in social welfare, that the Government is not necessarily the best judge of what is needed and that charity is a good thing. If that last suggestion sounds obvious, it is a matter of contention by the traditional Left. Charity, they believe, is random, unreliable, demeaning for the recipient and prone to value judgments about who is deserving.
Charity may have all those deficiencies - if the last is indeed a demerit - but the fact is our society depends on it. A few weeks ago Auckland's Mercy Hospice moved into new Ponsonby premises financed largely by donations from the ASB Community Trust, Lion Foundation, Portage Trust, Carr Endowment Trust and many others. Writing in the Herald, the hospice chief executive, Jan Nichols, said, "Most New Zealanders are unaware of the extent to which contributions such as these keep many of our health, social, education, arts and recreational services afloat."
They are also unaware of how much time and effort organisations such as the hospice have to put into fundraising every year. Much of this time and effort might be better employed if fundraising was made a little easier. Philanthropic societies have been calling for several such incentives for a long time and this week Mr Key answered some of their prayers.
National, he said, would remove the cap on the tax rebate for donations. At present donors can claim the 33.3 per cent rebate on donations up to a maximum of just $1890 a year. National has promised to pay the rebate on all donations without limit. It will also remove the 5 per cent limit on the proportion of company income that may attract the rebate, make the incentive available to all types of business and remove gift duty from donations.
This time Mr Key may have got in just ahead of the Government. The tax treatment of charities has been under review by the Government and a discussion document issued in October considered raising the rebate cap, or improving the rebate rate, though not doing away with the cap entirely. Finance Minister Michael Cullen has greeted the National Party policy announcement as "completely lacking in novelty", which could mean much of it was already in his Budget draft for this year, or it is now.
Selective tax incentives for any purpose have been out of favour for 20 years because they invite companies to gear their activities for tax advantages rather than market returns. But philanthropy is an activity outside market options. It is an investment in the social environment of business, rather like a tax payment. There seems a certain logic, therefore, in reducing a donating company's taxation by a proportion of the amount it has voluntarily given to the community.
The difficulty is in defining a charity for tax purposes. All sorts of recreational and co-operative enterprises are likely to register as charities if it gives their benefactors a tax break. But then the virtue of independent charity is that many more people than a Cabinet contains can pick a deserving cause.
