I move:
That Dáil Éireann, recognising the invaluable work being undertaken by those charitable organisations which constitute the Irish Charities Tax Reform Group, acknowledging that tax relief similar to that being sought by the Irish Tax Reform Group is available in other European jurisdictions and in the United States, Canada and Australia, calls on the Government to allow tax relief on certain corporate donations to charities, to announce this decision in the Budget Statement of 3 December 1997, and to implement it in the Finance Act, 1998.
I wish to share time with Deputies Deenihan and Perry. The Irish Charities Tax Reform Group has not been long established. Its membership consists of the main charitable organisations which do such excellent work with which all Members are familiar and in one way or another have praised, endorsed and sometimes assisted them. The Irish Charities Tax Reform Group wants every Member to support the motion in my name. I know the policy it proposes has virtually universal support among not only members of Fine Gael but of all parties and Independent Deputies in this House.
We are fully aware of the work of individual charities and we can assist their work in ensuring the funds they have at their disposal are substantially increased. This will be done if the House agrees the motion, if the Minister for Finance announces on budget day that he will introduce tax relief on certain corporate donations to charities and if he implements that decision in the Finance Act, 1998.
At present, tax relief is available in respect of payments to certain charities whose activities take place abroad, particularly in the Third World. There is no tax relief on either personal or business donations to charities whose sphere of operation is in Ireland. This is surprising as our tax code contains a multiplicity of tax reliefs. It is very surprising that a code which is so well endowed with reliefs of all sorts has never been amended to exempt from tax donations made to charitable organisations by individual donors or businesses.
It is doubly surprising because there has been a tradition in this country of imitating tax reliefs which apply in other jurisdictions, especially reliefs available in the United Kingdom. The relief being sought through this motion is available in many of our European partner countries, in the US, Canada and Australia. From advertisements on British television I know that in the United Kingdom tax relief is available even on donations to charities by individuals. The tax authorities in the UK have a mechanism in place whereby they top up donations made by individuals to charities by the appropriate amount of relief due to the individual. This guarantees that the amount available to charities is increased substantially as the tax benefit accruing to the individual is transferred to the charity.
The motion before the House makes a far more modest proposal. It confines itself to the proposal which is being made by the Irish Charities Tax Reform Group in their correspondence to Members of the Houses of the Oireachtas. The proposal is confined to certain donations made by businesses and deals with the principle of the issue rather then the detail, which is more appropriate to the Minister for Finance and the Finance Act. The detailed proposals are that business donations made to certain charities should be allowed for tax purposes as normal business expenses; tax relief should not apply to either outlandish or nugatory amounts or to donations of less than £100 or in excess of £10,000 made to individual charities; it should be subject to an overall ceiling of £50,000 or 10 per cent of taxable profits in respect of individual companies. This will avoid painstaking paper work of little benefit to charities in respect of small donations while at the same time provide a ceiling which will alleviate fears that the relief may be used in a manner which would operate in an unacceptably adverse way to the Exchequer. It would allow successful Irish businesses to make donations of £10,000 to five charities of their choice and to claim tax relief on these donations in any particular tax year. It is a modest proposal which I know the Minister favours in principle and I ask him not to press the amendment tabled to the motion but to accept it in the principle in which it is put before the House and to give a commitment to act in accordance with its terms.
Relief should be confined to charities with a registered CHY number. The Revenue Commissioners have a straightforward scheme in place for supplying eligible charities with CHY numbers, operated through their office in Nenagh. Naturally, Deputies would like to ensure that donations to which relief applies would go only to properly run charities which are totally above board in their activities. Consequently, if the Minister for Finance decides to introduce the scheme I advocate in the 1998 Finance Act, I expect him to introduce conditions relating to the eligibility of charities, including conditions in respect of annual audits, filing returns with the Companies Office and compliance with other conditions or provisions of company law which the Minister may consider appropriate to ensure the relief would operate as intended by Members.
It is not the first time this case has been made in the House. During the debate on the last Finance Act, the Minister for Finance tabled amendments to achieve exactly what I now advocate. The then Minister for Finance, Deputy Quinn, was in favour of the relief proposed but reluctantly did not accept the amendments. I understand his advice was that his officials and the Revenue Commissioners were afraid that too wide a door might be progressively opened and that the cost of the extended relief might be difficult to justify and onerous on the Exchequer. This fear would be well founded if tonight's motion resulted in the introduction of general relief for both personal and business donations without any ceiling on the amount of the donation. Some charities would regard this as the ideal position. We know, however, that frequently in life and politics the best is the enemy of the good and that the representatives of the charities who have contacted Members would be extremely happy if the motion before the House was accepted by the Minister and if relief was introduced but confined to certain business donations with appropriate ceilings and conditions as to how the scheme would operate.
It is estimated that corporate donations in Ireland to charities amount to about £12 million per annum. The rate of tax applying to the corporate sector varies. Manufacturing industries and certain financial services pay a maximum rate of 10 per cent while other businesses pay a maximum rate of 36 per cent. Consequently, the relief to individual companies would depend on the sector in which they trade. The general estimate which I do not think is too far off the mark is that the amount of relief which would be levered by this motion would be around £3 million.
My proposal, if accepted, would result in tax relief of this amount applying to different companies. If this were the end of the affair, such relief would be of very little benefit to charities because it is the donor companies, rather than the charities, which would benefit. The charities and those who run them are confident that the existence of the relief would encourage the corporate sector to significantly increase their donations. Rather than companies pocketing the new relief it would, in effect, be transferred to individual charities through increased donations. I would prefer the UK system where the relief to which a business is entitled arising from a charitable donation is paid directly to the charity rather than to the individual business with the compliance of that business. It would be a better scheme if the relief were remitted directly to the charity rather than to the donor.
Some observers and contributors to this debate may argue that this is much ado about nothing. They may assert that the amount of money involved is too small to make any significant impact on social injustice and that the real needs of individuals and communities are of greater magnitude than £15 million or an additional £3 million could meet. Many people outside this House would be of the view that we should always deal with grandiose sums in here. Deputies would take a different view; they are well aware of the ways in which social injustice can be effectively targeted by relatively small amounts of money. Other people would argue that the State should undertake to fund the activities currently being carried out by charitable organisations. This is an age old ideological argument which is frequently made by the extreme left of the political spectrum. Such an argument maintains that the work carried out by charities rather than alleviating social injustice ensures the State is relieved of the responsibility of dealing with these issues. As charities can never do the job in full because of limited resources they, in some ironic way, provide a safety net for an indolent State which is relieved of its responsibility and consequently does nothing. In my view that argument is rubbish; it may have been true in the 19th century but it is certainly not true in modern democracies. I do not want to dwell on the issue, I merely mention it as a potential argument.
I would like to acknowledge the excellent work done by charities over the years. If they had not been active in so many areas, the work they carried out might not have been done at all. We have a very proud tradition of co-operation and partnership between public bodies and voluntary organisations. This partnership has enhanced and improved the delivery of many social services and the work of charities, in particular, has dramatically improved the quality and degree of assistance available to persons with needs, problems and disabilities.
The amount of relief advocated here is approximately £3 million. If this proposal succeeds corporate donations to charities in 1998 will be approximately £15 million. This may seem small in contrast with the enormity of the social problems of which we are all only too aware. In this context, however, it is worth recalling that £15 million approximates to the total annual expenditure of the Society of St. Vincent de Paul which provides real practical assistance to over 200,000 persons in Ireland. We are not talking about nugatory amounts but about amounts which can be used to supplement the work already being carried out by State agencies and Government Departments, money which, in the hands of people living in communities, can be very effectively targeted to supplement what is already in place and to provide additional relief and assistance where necessary. If we were to take the Society of St. Vincent de Paul as an example of the way in which so many people can be assisted through the expenditure of £15 million, we would have a clearer view of what the charities are looking for when they seek this relief.
No words of mine could sufficiently praise the work of the charitable organisations. I commend and congratulate them and their dedicated workers, many of whom are voluntary. I also compliment the dedicated professional staff employed by the charities who ensure they are effective, efficient and have a high reputation. If there were any question mark over the charities in Ireland, people would stop donating to them. It is because they are of such high repute and are held in such high regard that people continue to donate more to charities on a per capita basis than those in any other country. This is due to the dedicated staff and to the voluntary workers involved in charitable organisations. I do not want to single out any one charity but I have been contacted not only by the Irish Charities Tax Reform Group but by several of the individual charities which are members of that group and by all the principal charities which are household names. I commend them all for their excellent work and I commend this motion to the House.