News Room
Some background information: The Minister for Finance, Mr McCreevy,
has rejected demands by charities for changes to the VAT rules, which
cost them €63 million. Irish Times on April 30th 2002. 
View
the Article
Deirdre Mortell Chairperson of ICTRG responds to Minister McCreevy’s
"No VAT Refund for Charities" argument
(Irish Times , 30th April 2002)
Deirdre Mortell, Chairperson of ICTRG, agrees with Minister McCreevy
that the EU must collect VAT from charities and other voluntary groups,
she argues that the Irish Government through the Minister for Finance,
has the power to then re-pay the VAT to the charities, as long as they
are "outside the scope of VAT", as most are . Indeed, previous
Ministers for Finance have introduced VAT refund orders in specific circumstances
e.g. some medical equipment. So long as the total VAT take is not affected
the EU doesn't have a problem with what individual governments do with
their portion of it so it is possible to introduce a refund grant scheme
for charities without falling foul of the EU. (We have taken legal Council's
opinion on this and made it known to the Minister but the last we heard
it was being studied by the Attorney General - that was nearly two years
ago!)
The EU Parliament recently demonstrated their support for reform of the
VAT regime as it applies to charities in their response to the Commission’s
Tax Policy in the EU - Priorities for the Years ahead, which includes
a section as follows:
"Calls on the Commission to introduce in the VAT rules either
an exemption with a refund scheme, a mandatory reimbursement of VAT
or a super-reduced rate (applied to outputs in order to allow full recovery
of input tax) for charities, presently treated as consumers under existing
VAT rules despite their role as service providers and, consequently,
unable to recover input tax incurred on purchases;" ( della
Vedova Report – A5-0048/2002)
ICTRG's preference is for a refund mechanism as this leaves control with
the national authorities as to what constitutes a legitimate charity and
therefore who qualifies for the refund, issues raised by The Labour Party
and Fine Gael during this election campaign.
ICTRG is pleased to acknowledge the new tax relief on donations to charities
introduced by Minister McCreevy in the Finance Act 2001. From the 6th
April 2001, tax relief is available on donations of €250 or more
in any one tax year to eligible charities from both individual and corporate
donors with no upper limit on the amount of donations that qualify for
relief. Tax relief is applied to these donations at the donor’s marginal
rate of tax.
There is no question that this tax effective giving mechanism is a major
benefit to charities and was warmly and very publicly welcomed by ICTRG
but it is one that brings us into line with existing practice in the UK,
US, Australia, New Zealand and Canada where incidentally there is either
no lower donation threshold at all or a minimal one i.e. $5. This change
allows individuals and companies to give to charities in a tax efficient
way and does encourage philanthropy in Ireland. However, it is worth noting
that in addition Charities in Australia, Canada and New Zealand can reclaim
government sales tax (similar to our VAT) paid on supplies and in the
US they are not charged it in the first place in recognition of the key
role they play in providing services to those who need it most in society.
We believe that charities should not be taxed on providing essential
services to vulnerable people - all of the money raised should go to the
people who need it most and not the taxman. Through the 11,500 names signed
up, and the 26,000 + e-mails sent to candidates through www.vatcampaign.com,
ICTRG has shown that when the public understands the tax we pay, they
object very strongly!
Deirdre Mortell
Chairperson
Irish Charities Tax Reform Group
Related Article:
Tuesday, April 30, 2002: Irish
Times By Mark Hennessy
Minister for Finance Mr Mc Creevy has rejected demands by charities for
changes to the VAT rules, which cost Charities 63 million euro a year.
|
