§ Mr. Murphyasked the Chancellor of the Exchequer what recent representations he has received regarding value added tax relief for charities from individuals and organisations; and if he will make a statement.
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§ Mr. HayhoeDuring the past three months I and my Treasury colleagues have received a total of 11 representations from individuals and organisations regarding a general VAT relief for charities and similar bodies.
The case for a general relief for charities from the VAT they bear on their non-business purchases has been carefully considered by the Government on several occasions, but not agreed for three main reasons. First, VAT relief would give a very uneven spread of benefits. The actual sums going to each body would depend on its pattern of spending rather than the level of public support it enjoyed. Second, it would be expensive. It is estimated that tens of millions of pounds of revenue would be Lost. Third, the size and administrative complexity of a relief scheme would make it a wasteful and inefficient way of helping charities.
However, the Government do recognise the immensely valuable role charities play in this country and have clone much to help them in other ways. Each of the last four Budgets has contained important measures to assist charities. At the same time, the level of cash grants to charities has been steadily increased since 1979—last year direct grants from central Government Departments alone amounted to about £140 million. These measures have been a far more effective way of providing help than using all or part of the resources available to give an indiscriminate VAT relief.