Deputy Broughan has eight minutes remaining but he is not present in the House.
Private Members' Business. - Tax Relief on Charitable Donations: Motion (Resumed).
The following motion was moved by Deputy Noonan on Wednesday, 12 November 1997:
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.
Debate resumed on amendment No. 1:
To delete all words after "That" and substitute the following:
"Dáil Éireann
—acknowledges the valuable work being undertaken by the large number of charities operating over a very wide range of areas;
—also recognises the considerable resources and exemptions from tax already available to charitable bodies; and
—notes the submission from the Irish Charities Tax Reform Group and acknowledges that the Minister for Finance will give careful consideration to it during the preparation of the budget in December."
—(Minister for Finance).
I wish to share my time with Deputies Enright, Gerry Reynolds and Ulick Burke.
I support the proposal by the Irish Charities Tax Reform Group that relief be given on corporate donations to charities. I believe this proposal is supported by all taxpayers, including those who have been promised tax cuts in the budget. Regardless of how self-sufficient one is, most people will require the services provided by charities at some stage. No man is an island and when one is old, sick or disabled one needs the help of others.
In ideal circumstances all charities would be fully funded by the State. However, this will probably never be the case. The services provided by charities are very labour intensive and costly. These costs will continue to increase as the standard of service people rightly demand improves over time. Charities will always have to depend on an element of fund-raising and the State will continue to depend on the charities to help it meet its responsibilities.
Last week the nation was shocked and outraged to hear on "Tonight with Vincent Brown" tragic stories about the level of underprovision for services for people with a disability. I am a member of a health board and the public would have been even more shocked if the services funded by voluntary effort were not provided. Although fund-raising cannot meet the massive level of infrastructural investment required, it can improve the quality of services, thereby improving the quality of life for recipients. Even if the issues of compassion and human decency are taken out of the argument, there is no more cost efficient way of the State meeting its responsibilities in this area and ensuring we do not hear similar stories in the new millennium than granting relief on corporate donations to charities. Such stories are an affront to, and indictment of, all Members of the House. I include all sides of the House in this as the problem has been allowed to develop over many years.
The Minister spoke glowingly of the work of voluntary fund-raisers. They have a proud tradition of service and have made a huge contribution over many years. I have been involved in fund-raising for St. Michael's House for more than 20 years. However, the pool of fund-raisers is dwindling and in many cases fund-raising is now undertaken by the families of those receiving the service, people who are mentally and physically exhausted from the burden of care they carry. These people sell tickets for prizes which are pathetic when compared to those offered by the national lottery. They also organise race nights and sales of work. However, the returns and audiences are diminishing as people have other calls on their money and time. We should make it easier for those people to raise funds. Corporate donations are available at present, but not at the level that would be available if tax relief was introduced. I understand the Minister's reluctance to introduce further tax reliefs, but there are already many reliefs in place for causes less worthy than charities.
In the context of the Estimates, it appears charity organisations will have to carry the burden of financial probity. We are talking about £3.3 million in total revenue forgone by the State. The State could be a net beneficiary of such a measure. At present multinational companies pay a mere 10 per cent corporation tax. They repatriate most of their profits to the home country and probably invest in charities there because tax relief is available. If some of those profits were invested in Irish charities the economy would benefit. Many companies, both domestic and multinationals, would be more generous in their contributions to Irish charities if tax relief was available.
The Minister for Finance said last night he would be reluctant to grant this concession because there would be no control over money given to charities as a result of tax relief, but that is a red herring. Every day taxpayers' money is made available to individuals, groups and organisations over which we have no control whatsoever. If controls are needed the Minister should put them in place. Charities should not be penalised because of lack of controls. That is no excuse for not granting tax relief on corporate donations to charities.
This concession should be put in context. We are talking about a maximum of £3.3 million in revenue forgone. It is not a vast sum, it will not throw our finances into disarray and it will make no difference to the Maastricht criteria. There is universal support for such a measure. Nobody believes that the so-called Celtic tiger should be a predatory animal feeding off the disadvantaged and most vulnerable groups in society.
I wish to share my time with Deputies Ellis and Marian McGennis.
Is that agreed? Agreed.
The question of tax exemption for charitable organisations has been raised for years. Charitable organisations point out that the previous Governments considered this matter but did nothing about it. It is time something was done in this regard. Why is tax relief necessary for charitable donations? There are many organisations involved in charitable work such as the Conquer Cancer Campaign, the National Council for the Blind, the CRC in Clontarf, an area I represent, and the Irish Hospice Foundation. The St. Francis Hospice in Raheny does tremendous work and there is increasing demand for its service. Unfortunately, it had to raise approximately £1 million in funding last year. If this exemption was granted, it would be able to provide a better service for the large number of people who rely on it. Many of the less well off in society have to rely on charitable organisations. Our economic growth is not filtering down to those in need.
We must note the recommendations of the Irish Charities Tax Reform Group and take action. Representatives of that group have spoken to the Minister for Finance who will give careful consideration to their submissions. I wholeheartedly support that group. The community at large will benefit if it receives the tax exemption it rightly deserves.
This is the first opportunity I have had to congratulate you on your appointment as Ceann Comhairle. I wish you well in the post. It is nothing more than you deserve after 36 years of service to the House.
We are discussing a private Members' motion tabled by Fine Gael which has a great deal of merit but little substance. This issue has been a hot potato with charities for a number of years. They have sought tax breaks in the past and some have been granted. None of us has a gripe with the great work done by charities and voluntary groups. We all acknowledge the efforts of those who raise money for various charities at their own expense. However, not all of the money ends up with the people for whom it is raised. Much of the funding raised for charities is spent on administration. Most people are willing to help charities to ensure they maintain the services they wish to provide, but we must ensure more of the funding raised by charitable organisations ends up with the people for whom it is raised. While I accept charities do their utmost to curtail spending on administration, they should be properly audited. Perhaps registered charities should be audited by the Comptroller and Auditor General from time to time. I am not saying this is necessary, but the public would be much happier if this were done.
All charities do good work whether at home, in the Third World or elsewhere and their work should be supported. Tax relief on corporate donations is only the thin end of the wedge. Personal donations will eventually be exempt from tax and, while I would have no difficulty with that, the amount of tax relief that could be claimed on donations from private individuals would have to be capped.
Perhaps we should examine another option of allocating a small percentage of the revenue raised by the State for subdivision among charities. According to 1995 figures, charities receive approximately £487 million from various Departments. That is more than £1.25 million per day from the State. In view of that contribution, one wonders how the State can be expected to carry the extent of revenue loss currently being proposed by charities. The charities should consult with the Department of Finance and the other funding bodies to see where common ground can be found in the future with regard to dealing with the charities' requirements.
There is a need for personal donations to charities, whether they are through receipts from estates or from charitable donations during the donors' lifetimes, as most charities depend on them for their income. However, why is this money spent in ways which do not always benefit the needy? The administrative element of the cash take of charities is exceptionally high and people should be aware of that. I am not criticising the charities. I am aware that if they do not pay reasonable salaries they will not recruit people who are capable of carrying out the work they require. However, there is a need to balance that with the efforts of people on a voluntary basis at local level raising funds which are sent to the headquarters of charities and are not spent in the local areas.
This is a motion of convenience. Every Deputy has received letters from various charities in recent months seeking changes in the current system. The charities should come together and arrive at a realistic proposal instead of the proposal the group has put to the Minister for Finance. A sensible approach is necessary. I am not opposed to donations to charity but a capping system is necessary with regard to the amount of money that can be donated and the incentives that can be offered for such donations. An acceptable level would be a donation of £50 per annum which would be tax exempt in the context of personal taxation. The maximum donation from companies which should be tax exempt should be about 1 per cent or 2 per cent of profits. The ceiling of 10 per cent of profits, as was proposed in some of the submissions I received, is beyond what could be acceptable. A £3,000 charitable donation from a company at 10 per cent is the equivalent of £30,000 profit if the company were given a £3,000 tax exemption. In the case of corporate entities it is equal to between £6,000 and £7,000 of profit being tax exempt.
We have sympathy for the charities. However, the system must be tightened. It is also necessary that charities be accountable to those who provide them with funding whether it be Departments, the Exchequer, the health boards or other organisations. They should be open to the same examination as the State groups which provide them with funding.
I spoke on a similar motion in the Seanad a couple of years ago. At that time the Minister concerned, Deputy Noonan, was unconvinced by the many speakers in the Seanad, perhaps because the motion was tabled by Fianna Fáil. I am pleased he has had time to mull over the contributions and decide they have some merit. Like my colleagues I have received representations from the Irish Charities Tax Reform Group which I compliment on its co-ordinating role in this issue. I received representations from each of the charities involved and it is not my intention to focus on any individual group. They are all worthy of our support and appreciation. For that reason it was appropriate that the co-ordinating body, the ICTRG, should press the cause on behalf of all charities. It has given the charities a great degree of strength and co-ordination and focuses all minds on their cause.
I have been concerned at the apparent differences in treatment of individual charities. It is unfortunate that in the past funding has gone to those with the best PR machine at the expense of those with the best cause. This co-ordinating body should remain in place after this issue is dealt with to try to redress the imbalances.
My approach to the representations has been to respond to each group expressing support for the concept and to contact the Minister for Finance on behalf of each group requesting him to consider the issue in the context of the forthcoming budget. That is why we need to support the amendment. The amendment acknowledges the careful consideration the Minister is giving to the proposal. I have no doubt the representations from all sides will be taken into account. We will have to wait until budget day to hear the Minister's decision and I am sure Deputy Noonan will manage to be patient until then.
There is a perception that charities, by their nature, are not as professional as corporate bodies. I dismiss that myth. Charities today are large professional organisations with full-time staff and the highest of standards. However, the fund raising base of many of them is still the voluntary worker, to whom I pay tribute. Whether it is the person outside the supermarket with a bucket — I have been that person on many occasions — or the walker — my husband is permanently one of those — cyclist or parachuter, they are all worthy of our recognition for their effort on behalf of Irish charities.
I am pleased the amendment pays tribute to the work done by charitable organisations in Ireland. In an ideal world many of these bodies would not be charities but would receive all their funding from the State. When public representatives attend meetings of various voluntary organisations the case is made that without their effort the burden on the State would be extremely high and in all probability those supported by voluntary efforts would not be catered for. I reiterate the words of the Minister and support and pay tribute to those charitable groups who work tirelessly on behalf of the causes they represent. Even in good times, financial resources are limited and all calls cannot be met.
Previous speakers said there is considerable support for charities already in place. Exemptions from income tax, corporate tax, deposit interest tax, capital gains tax, capital acquisitions tax, stamp duty and probate are available in certain cases. I do not claim to have a knowledge of many of these taxes and perhaps they cause the charities to have to do much extra work. The Minister said Exchequer support for charities was estimated at £487 million in 1995. This is a significant amount of money which the Exchequer must account for to the taxpayer. However, it is money for which we get extremely good value.
Direct income to charities has suffered from the introduction of the national lottery and the limitations on charitable lotteries. There is a perception that not enough money is being directed from the profits of the national lottery to charities who are losing out because of the success of the national lottery. If the amendment is agreed and the Minister is in a position to deal with it in the budget, more financial resources will be directed towards the charities who have made representations.
Tax relief for any group is a complex issue and I do not pretend to understand it. Any relief given has knock-on effects and inevitably results in calls for extensions and expansions. In recent years the policy has been biased towards widening the tax base and moving away from new tax reliefs. That is a sensible and reasonable policy.
I have been concerned for some time at the absence of a statutory framework for the regulation and supervision of charities. I welcome the commitment from the Minister for Justice, Equality and Law Reform, Deputy O'Donoghue, to introduce legislation on this matter. Many people are concerned at the use of fundraising organisations who take what is often seen as an unfair share of the money raised. They are in the minority but there is much public concern at reports which suggest that the administration costs of some of these charities has been far in excess of that for more efficient charities who manage to keep their administrative costs extremely low. While this is not strictly relevant to corporate donations it is a matter which has been of concern in the public domain.
I acknowledge recent funding by the Minister for Health and Children for major works at the Cerebral Palsy Ireland Centre, Sandymount and for his commitment to funding for the Irish Association for Spina Bifida and Hydrocephalus who do not receive their fair share of funding. I understand the intent of the motion tabled by Fine Gael. It is more or less the same as that which the Fine Gael Group in the Seanad had when we tabled a similar motion. There is general agreement on the need to ensure where corporate donations are given, as was the case when the former Minister for Finance, Deputy Quinn introduced the relief on donations to Third World bodies, that we will level the playing pitch and ensure the same criteria applies to Irish charities. I am sure the Minister is aware of this. I am prepared to accept the amendment in the belief that the Minister will deal with it at budget time.
I wish to share my time with Deputy Ulick Burke and other Fine Gael Deputies. On behalf of Democratic Left I express my support for the motion in the name of Deputy Michael Noonan, which calls on the Government to introduce tax relief for donations to charities, as sought by the Irish Charities Tax Reform Group. Like other Members, earlier this year I received a submission from the Irish Charities Tax Reform Group. It was succinct, fully costed, modest in its demands, well argued and entirely logical in the case it made. At a time when the Exchequer is awash with money it would take a Minister for Finance with particularly Scrooge like qualities to deny the reasonable demands of the reform group.
Charitable organisations play a key role in society. In many cases they plug the gaps in our health, social and community services. One has only to look at the range of organisations that constitute the Irish Charities Tax Reform Group to appreciate the breadth of the role they play, organisations such as Victim Support, the Simon Community, Rehab, UNICEF, the Irish Cancer Society and many more. It is no exaggeration to say that our society would break down without the work being done by charitable and voluntary organisations, yet in many cases they get scant recognition and little support from the Government.
Most charities live a hand to mouth existence. They are almost totally dependent on voluntary fund raising which itself is subject to the vagaries of public opinion. The financial uncertainty makes long-term planning difficult, even in regard to guaranteeing the jobs of their professional staff.
The difficulties in raising funds have increased enormously during the past decade due to the spectacular success of the national lottery and charities estimate they have lost up to £200 million in donations since it started to operate. The reality is that unless we are prepared to contemplate a massive increase in public spending across a range of services we will continue to rely on charitable organisations in dealing with poverty, illness, homelessness and services for people with disabilities. As long as we rely on charities to provide services that the State is unable or unwilling to provide it is reasonable that we should provide them with appropriate financial and other supports.
One simple, effective and relatively cheap way in which we can assist charities is by agreeing to their modest request in regard to tax relief on donations. The principle of allowing tax relief on donations has already been conceded by the State but only in relation to personal donations to charities operating in the Third World. This was done in the 1995 Finance Act but the result is that we have in effect a two-tier system for charities with those doing commendable work in the Third World able to offer tax relief on donations while those doing equally commendable work at home are not.
The Irish Charities Tax Reform Group is seeking to allow donations between £100 and £10,000 to approved charities to be regarded as a business expense and thus qualify for tax relief. It further proposes that the total amount allowable in donations in any one year from any one company would be £50,000 or no greater than 10 per cent of the company's taxable income. It believes, based on research it has undertaken, that this move would result in an additional £11 million in donations to Irish charities. The cost to the Exchequer in terms of tax forgone would be £3.29 million, a modest sum when compared to the £40 million in tax forgone in recent years through the car scrappage scheme. In what is in my experience an unprecedented offer from a lobby group the group states that it would agree to a suspension of the scheme in the event of the tax foregone exceeding £3.29 million.
In withholding tax relief on donations to charities we are out of step with most of the developed world where such tax relief is the norm. As a people we pride ourselves on our generosity when it comes to making donations to charities. It is time for the State to show the same generosity.
There is a need for a general review of the legislative framework governing charities. There are, I understand, close to 4,000 bodies recognised as charitable organisations by the Revenue Commissioners. These range from small local voluntary organisations with modest budgets and no staff to vast international organisations with multi-million pound turnovers and large numbers of staff at home and abroad.
Despite the huge growth in this sector we do not have an up-to-date legal definition of the term "charity". I understand the current definition in Irish law has its roots in 1601 enactments. This is ludicrous and needs to be updated urgently.
Promises of legislation have been made by successive Government but to date nothing has been forthcoming. It is essential that we produce a proper legislative framework to govern the operations of modern charities. This should clearly define a charity, set clear guidelines for the operations of charities, deal with such matters as how money raised can be spent, set limits on the amounts that can be used for administration purposes and specify the minimum standards for the production of accounts. These would be welcomed by all legitimate charities and help to protect the image of the sector from the activities of the occasional rogue operation which pops up from time to time.
I urge the Minister, if and when he is preparing the legislation, to look at another initiative which could assist charities. This was raised on a number of occasions by my colleague, former Deputy Kathleen Lynch. I referred earlier to the difficulties being created for charities by the success of the national lottery. Section 8 of the National Lottery Act provides that prize money unclaimed after 90 days is returned to the national lottery. Unclaimed prize money, currently estimated to be approximately £4 million per year, is returned to the national lottery and used to top up what many people regard as already extravagant jackpots. Given the level of prizes already available I doubt if the additional £4 million adds much to the appeal of the national lottery or sells more tickets but that £4 million could make a huge difference to the charities concerned.
The unclaimed prize money should be diverted to a special reserve fund from which money could be disbursed to charities working in a particular area, for example, the badly underfunded area of mental handicap. As I mentioned, it is estimated that the national lottery has taken revenue of the order of £200 million from charities since it started to operate. This would provide an opportunity, without additional costs or significant loss to the national lottery, to restore the balance.
We all accept that charities are part of the fabric of civil society. The way in which they interact with State organisations and the critical role they play in tackling poverty and disadvantage in society needs to be given more formal recognition by the State, initially in the way suggested by the Irish Charities Tax Reform Group by allowing tax relief on donations to charities. Subsequently the legislation which governs their operations should be examined and unclaimed national lottery prize money should be used to compensate them for some of the loses they have incurred since the national lottery was established.
I wish to share my time with Deputies Gerry Reynolds and Enright.
I am delighted to have this opportunity to contribute to the debate on the motion in the name of Deputy Noonan which is a reasonable one in the current climate. It calls on Dáil Éireann to recognise the invaluable work being undertaken by the 20 leading charitable organisations which constitute the Irish Charities Tax Reform Group. Each and every one of these organisations has a valuable role to play in catering and providing services for the disadvantaged, the homeless, the disabled, the very young and the very old. How could any Minister for Finance at a time of unprecedented buoyancy overlook or even decline to respond to the motion? I am sure he simply went through the formalities of tabling an amendment, as would any Minister, and will postpone announcing his intentions until budget day when he will have an opportunity to respond favourably to the needs of this worthy group. Never before has a Minister for Finance been afforded the opportunity he will have on 3 December to respond positively to their request and recognise their good work. Over the years these charities have stepped in to compensate for the inadequacies of Government Departments, particularly in respect of health and education and even stretching to the environment. All too often, the needs of these sectors have been pushed aside in favour of greater capital expenditure on infrastructure and their other needs have been ignored. Ultimately these needs must be met.
It would be wrong to suggest that nothing was done by previous Governments to face up to the enormity of the problem. In 1989 the then Minister, Mr. Gerry Collins, established an Advisory Group on Charities and Fund-Raising, under the chairmanship of Mr. Justice Declan Costello, whose report was presented on 26 November 1996. This clearly demonstrates that efforts have been made to tackle the problem over many years, yet nobody has had the courage to devise legislative programmes to regularise the position.
It would be wrong to assume that this constitutes a major demand on Government resources since a mere £3 million to £4 million is the total amount requested by these groupings. Not alone is that all they have requested but they have guaranteed that they would request the scheme's suspension if ever its provisions exceeded those parameters, a very reasonable gesture on their part and nothing of which any Minister or Government should be fearful. They have capped their requirements. Very few lobby groups knocking on a Minister's door prior to budget day would have the sincerity of this grouping. I have no doubt that the Minister for Finance will respond as positively as possible to their very meagre demand.
These charities along with the parents, families and friends of these groups have rendered the living conditions of many disabled and disadvantaged persons somewhat easier, less painful and perhaps less dependent on these voluntary groups. Does the Minister recognise that a small gesture on his part would mean an infinitely better life and living conditions for many of these people? The figure of £487 million in Government contributions is mistaken because it represents services which would have to be provided by the Government in any case. Were it not for the enormous efforts of the many voluntary groups to raise funds for these organisations the Government's bill would be much greater.
On the matter of fund-raising, there are those who would assert that not everything is accounted for or sufficiently transparent. I reject any such assertion because each and every one of the charities listed within this group has accountability as a priority. All persons involved in voluntary fund-raising must protect their reputation and cannot afford to prevent disclosure of any of such funds raised.
If we want to describe ourselves as good Europeans it is important that we align ourselves with the position in other European countries in addition to the United States, Canada and Australia. If the Minister maintains that we are the good Europeans we claim to be, he can no longer resist standardising this position by granting a small relief of £3 million to £4 million to this group. If there are any suspicions with regard to accountability, this would clear the air. I suppose it is fashionable to question the operations of Third World organisations because of the standoff between GOAL and the Department of Foreign Affairs. Therefore, it is important that we tackle the matter and legislate properly for all charities.
The Government cannot have its loaf and eat it. Deputy Gilmore mentioned the national lottery. As a result of its operations all national charities have suffered enormously. It is important that Government Departments which benefit from national lottery funding recognise that they have usurped funding which would otherwise go to the charities in question. If the Minister for Finance levels the playing pitch, this would allow many of them to run a lotto without the former very severe capping imposed on them. It is important that the Minister urgently recognise that fact.
I ask the Minister to respond positively to this request so that, following the forthcoming budget, these organisations and their wonderful work over very many years will be recognised and rewarded in this very small way.
With the permission of the House, I wish to share my time with Deputy Enright.
It is worth quoting the motion tabled in the name of my party spokesman on Finance, Deputy Noonan:
That Dáil Eireann, 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.
This speaks volumes about the direction in which our society is going.
It is my belief that the Irish Charities Tax Reform Group should not have to lobby politicians. All Governments and political parties should recognise the amount of extraordinarily difficult work these groups undertake within our community generally. It is my firm belief that all Members of this House would be agreeable to having the provisions of this motion implemented. We all know the hard work done by charitable organisations and we can give examples of it. Most of this work is done on a voluntary basis.
We are speaking of £3 million to £4 million of a concession. We are told every day this country is awash with money and that we do not know what to do with it. The vulnerable and the underprivileged should be cared for as a priority. We are not requesting an exorbitant amount of money, and it would help these organisations to develop their care of underprivileged people in our society. The Minister has probably given a standard reply which he does not believe. Because of the lobbying of the Irish Charity Tax Reform Group, we are now aware of the constant difficulty charities face in raising finance. I hope the Minister, Deputy McCreevy, will acknowledge this in his December budget by introducing what is called for in Deputy Noonan's motion.
Ireland is noted for its donations to GOAL and other charities working overseas. However, we must take into account all charitable groups and persons with disabilities should also be taken into account. They are the most vulnerable in our society and need all the financial help they can get. Doing something as small and minuscule as this would go a long way towards saying politicians understand the valuable work people are doing on a voluntary basis for the most vulnerable in our society.
The motion before the House this morning should have the full support of every Member. The Minister states in his amendment that the House acknowledges the work of such charities, recognises the considerable resources and exemptions from tax already available to charitable bodies and notes the submission from the Irish Charities Tax Reform Group. I am sad the Minister did not agree to the motion in principle so that he could grant the concession in the Budget Statement.
This is not a party political issue. We all share the common goal of improving the lot of charities which require financial assistance. Tax relief was allowed in 1995 on personal donations to Third World charities. The motion today is motivated by the considerable criticism of the lack of tax relief for corporate donations to charities. There should be such relief. Much work is done by these organisations. The Children's Medical and Research Foundation is the fund-raising arm of Our Lady's Hospital for Sick Children in Crumlin, Dublin, and everyone knows the work being undertaken there. The Irish Kidney Association, the Irish Hospice Foundation, the National Council for the Blind, the Irish Migraine Association, the Irish Wheelchair Association and many other bodies have been doing wonderful work over the years.
The national lottery has been a great success, but many people who would otherwise give their pound to Rehab, the St. Vincent de Paul, the Irish Hospice Foundation, the Irish Kidney Association and others spend it on lottery tickets instead. As it has effectively reduced the income available to these charities, the House has a duty and obligation to address that problem and it is essential it does that. When one sees the number of homeless people in Dublin, the numbers in wheelchairs, the other people with problems I have outlined and the difficulties experienced by groups caring for them in trying to raise funding, we must realise it is essential that we help redress the imbalance which has occurred.
A number of people who are directors of financial and business institutions become directors of these charities and do a great deal of good work. It is in everyone's interest to encourage more of these corporations to contribute to charities. The Minister stated it is very difficult to work out the amount of money which would be lost to the Exchequer. I understand the figure would be between £3 million to £4 million. However, in the context of the benefits which would accrue and the savings which will be made by the Government in many other areas, it would be shortsighted not to grant this exemption. It is essential it be granted. There has been strong economic growth for the past four years and the growth rate will be approximately 7 per cent this year. We should be able to fund this tax exemption and I strongly recommend that the Minister accept the motion.
Nuair a smaoinímid ar an tseachtain atá ann, leis an Uachtarán nua ag caint faoi tógáil droicheadaí, meastar dom gur sampla anmhaith é den rud atá muid ag caint faoi: carthanacht sa tír seo. Gan aon amhras, bhí an tUachtarán nua, Mary McAleese, ag caint faoin teachtaireacht Críostaíoch atá sa tír seo le 2,000 bliain. Is é obair charthanachtha bun agus barr na teachtaireachta sin, agus is dócha gurb é an chéad uair a chualamar faoin obair seo agus an teachtaireacht ná ins an Bhíobla. Ní hé sin an t-aon fáth go bhfuilim ag labhairt ar an ábhar seo ar maidin, ach measaim freisin gur iontach an deis atá againn an tseachtain seo chun caint faoin tlí gur féidir linn mar Rialtas agus gur féidir leis na grúpaí carthanacha droichead a thógáil idir na daoine bochta agus na daoine saibhre, idir siúd go bhfuil maoin acu agus siúd nach bhfuil. Why do charities have to depend on charity? The nature of their work is such that they carry out charitable activities and are at the core of our society.
Charities are largely dependent on voluntary contributions and the support of a generous public. For many years we have allowed things to turn on their heads; instead of doing charitable work, charities have been confined by the fact that they are dependent on charity.
President McAleese's theme is "building bridges". Charities build bridges between the haves and the have nots, the sick and the healthy, the rich and the poor. It is our duty as citizens, ordinary members of the public and, particularly, as Members, to ensure that their work is protected and promoted so that they can continue to build bridges.
Charities are forced to undertake a wide range of activities to secure funding. There are numerous charities and different organisations crop up every day to respond to the needs of society. Each day we are faced with public and church gate collections, flag days, children or students collecting at traffic lights, student fun days, scratch cards, lotteries, coffee and tea mornings and theme days. The imagination of charities has been stretched to the limit to advertise their good work in an effort to secure funding.
It is unfortunate that parents of children with special needs find that much of their time is spent raising funds rather than looking after the needs of the child. This is why it is the Government's duty to assist in every possible way. How can we achieve this? The Government funds charities through the national lottery and the Exchequer. A report issued by the Department of Social, Community and Family Affairs called Supporting Voluntary Activity suggests that £488 million should be given to charities every year. This is a very generous sum. However, is it, or can it ever be, enough?
National lottery funding has rightly been increased over the years because the money raised by charities through their own methods is decreasing. In 1992 the public gave £246 million to charities. In 1994 the figure was £217 million, a drop of £29 million. During the same period national lottery receipts increased by £39 million. It is not easy to simply compare one figure with another and claim that there is a direct correlation. However, people have only so much spending power; if they give to one they cannot give to others.
Those most affected by the national lottery are the charitable lottery organisers governed by the Gaming and Lotteries Act, 1956. I welcome the charitable lotteries fund established by the Government which was advertised and launched on 8 October. This has been established to supplement the income of private charitable lotteries whose products are in direct competition with similar products available from the national lottery. The basis for disbursing the fund is complete, fair and transparent. However, perhaps there is also an opportunity to review the Gaming and Lotteries Act, 1956, which places a cap on the prize money offered by charitable lotteries.
Public and church gate collections are suffering because there are so many of them and fewer people are attending churches. I question the criteria for licensing flag days, particularly in Dublin. All too often we are faced by collectors urging us to help the unemployed and the homeless. These are general terms which give no indication of the beneficiaries or the charities involved. Collections should be more specific and collectors should be properly trained to indicate the beneficiaries of donations.
I question the use of children in so much fund-raising. For 16 years I taught in the Dominican College, Sion Hill. The school is generous in allowing students collect for worthy charities. As transition year co-ordinator, not a week went by without my receiving a request for help. I was forced to say "no" on occasions because some of the children found it extremely difficult collecting on the streets. They got abuse, were questioned about some of the charities, found it unsafe and had to travel in groups. Perhaps more attention should be given to using children in collections only where charities ensure they are backed up by proper adult support.
I am most concerned by the amount of charities who collect money from traffic stopped at traffic lights. This is highly dangerous. Students and young people dash among the traffic, pushing boxes and leaflets through car windows and then try to escape while the cars are on the move. I hope this will be declared illegal. I raised the matter during my time on Dublin Corporation and was told it would interfere with newspaper sellers who are part of the city's culture. Newspapers sellers are long accustomed to the traffic and know how to negotiate their way. However, young people out on a once-off occasion think it is great fun to dash between traffic. This is an accident waiting to happen and it needs to be reviewed by the Garda, the local authorities and the charities. While acknowledging the charities' need to raise money, dashing between traffic is not how it should be done. It is hazardous for both collectors and drivers.
The Irish Charities Tax Reform Group made a pre-budget submission requesting relief for corporate donations to charities. This is not a new idea. Some groups can receive corporate relief. For example, donations made to education, Cospóir, the arts and the Minister for Finance are allowable against tax. It seems a natural and logical step to extend relief to charitable donations. Many OECD countries permit companies to make donations free of tax to properly registered charities. This ensures that large companies can be more generous than would otherwise be the case. The situation in other European countries allows us to say we will not be out on a limb. The Government is committed to supporting the work of the charities in whatever way it can. The Minister has adopted that principle and we can be assured of his favourable consideration in the near future.
I echo the sentiments expressed by my colleague, the Minister for Finance, in the House yesterday. Everyone in Ireland is aware of the valuable work done by charities, many of which are voluntary and community groups. They play a major role in performing important functions such as providing social services, combating poverty and engaging in local development. All governments recognise the important work charities do and this is reflected in the level of support provided.
I urge all Members to support the amended motion. The discussion on the Irish Charities Tax Reform Group's proposal, referred to by Deputy Hanafin, seeking a tax relief on corporate donations to charities has been a useful tool in clarifying the issues involved. While I am sure we were all convinced that we knew what constituted a charity there is now a realisation in the House that there is no comprehensive definition of a charity in our legislation.
There is also a mistaken belief that the Revenue Commissioners supervise charities. The function of the Revenue Commissioners in this matter is that it will grant bodies which have proven their case certain important exemptions from tax. The Revenue Commissioners do not approve or register charities. While the Revenue Commissioners randomly check charitably exempt bodies they have no role in supervising their activities.
It is important to consider the criteria the Revenue Commissioners use to determine what is a charitably exempt body. Our legislation does not contain any real definition of a charity. Section 334(3) of the Income Tax Act, 1967, says ". a charity means any body of persons or trust established for charitable purposes". This is not a very useful definition. Because "charitable purposes" has not been defined in law the matter has been determined by a judgment in a court case dating from the last century. In this case four categories of charitable purpose were set out as follows: the advancement of religion; the advancement of education; the relief of poverty; and other categories beneficial to the community not falling within the other three categories.
The Revenue Commissioners pointed out that the number of applications received for these tax exemptions over the years is around 12,500 of which approximately 8,000 have been approved, and it is estimated that 4,000 of these are currently active. This is a very large number and I am sure it has surprised some Members of the House.
Another point to note is that in the five years to 1996, 57 per cent of all applications for charitably exempt body status were for the fourth category, that is bodies that are "beneficial to the community". This is potentially a very wide definition of a charitably exempt body.
The main difficulty with the proposal to give tax relief to charities is the current lack of any form of registration or supervision of the large number of active charities. Governments have been aware for some time that the current position of charities is unsatisfactory. Members will remember the committee chaired by Mr. Justice Declan Costello to examine this. He made a number of recommendations. As my colleague, the Minister for Finance, said in the House yesterday, the Minister for Justice and Law Reform, Deputy O'Donoghue, is examining legislation as well as a programme of reform relating to the administration and supervision of charities, based on the recommendations of the Costello report and the Burton advisory group. This will meet the future requirements of the large number of charities operating here.
(Carlow-Kilkenny): I wish to share my time with our spokesman, Deputy Michael Noonan.
That is agreed.
(Carlow-Kilkenny): I congratulate Deputy Noonan on raising this important matter before the budget when there will be an opportunity to debate it. I have a personal interest in this issue. I am chairman of the Delta Centre in Carlow which caters for up to 50 adult trainees with mental handicap. From the experience I have had in this area, I would welcome the acceptance of this proposal.
Most, if not all, charities deal with people who have a disability of one form or another. Such disability causes sufficient problems for families without expecting them to take on the main role of fund-raising. These families go to meetings expecting to be briefed on ways to handle problems involving a child or an adult needing special care, but the only question they are asked is whether they are free to raise funds. That results in people not wanting to go to meetings.
Ten years ago the parents and friends of people with mental handicap in our organisation subscribed a great deal of money but they tired of doing that. I do not blame them. I realise the health boards offer greater assistance now than they did in the past but we should do everything possible to take pressure off families who are experiencing problems in fund-raising. Asking these people to raise funds is only adding insult to injury.
A great deal of voluntary work is done by charitable organisations and people give freely of their time. I attend the AGM of the Irish Wheelchair Association every year and I marvel at the number of people who are willing to let their names go forward for election to a committee which involves a great deal of hard work. These committees do not get publicity. The people involved are required to lift people and drive them here, there and everywhere. These are the same people who are expected to stand on the streets and raise funds.
I do not want to repeat what has been said already but the lottery has caused havoc for many charitable organisations. The £1 investment which in the past could win a person £25 is no longer appealing when one can win £250,000 for the same £1. There has been a problem with lottery funding but it already has been referred to and I will not go over it again.
I was amazed to discover that if a company donates £1,000 to charity it is included in the tax bill and they end up paying £1,360. If the company's profits are £50,000 and it pays £1,000 as a charitable donation, that is taxed. That is unbelievable. Companies are willing to transfer money if necessary to charitable organisations, and that makes perfect sense to me. From my own experience I know the importance of such donations to the various charitable organisations. I look forward to a positive response from the Minister for Finance so that people will be able to devote their time to the welfare of the people they look after rather than selling tickets on the streets or holding coffee mornings. The necessity for such activities should come to an end. I look forward to a positive result to this excellent motion tabled by our spokesperson, Deputy Noonan.
I thank Deputies on all sides of the House who contributed to this debate and who supported universally the sentiments that underpin this motion. I know Deputies are constrained by arrangements with Whips, but if there were a free vote in the House its view is as clear as crystal. There is universal support for this motion and I have not heard a voice opposing its principle. If in regard to Private Members' motions, Deputies were in a position, as they should be, to voice their opinion the Minister would be advised strongly by the House to make an appropriate announcement in the budget to implement a provision along the lines of the motion in the 1998 Finance Act.
The Minister argued this case strongly last year in the debate on the Finance Bill with the then Minister, Deputy Quinn. It is appropriate to congratulate Deputy Quinn on his election as Leader of the Labour Party. He has a long and distinguished ministerial career and I hope he will have a long and distinguished career as Leader of the Labour Party. Our congratulations should extend to Deputy Howlin who was also a very able Minister and a good contender in the leadership contest. The Labour Party is fortunate because it could have picked either of the two contenders and had a good leader. This case was argued and the former Minister, Deputy Quinn, was well disposed to it, but on his officials' advice he did not support the proposal put forward by Deputy McCreevy. Positions are now reversed and the same type of advice is being given by the officials. I am not criticising them. They are doing their jobs. It is the job of officials in the Department of Finance and persons in the employment of the Revenue Commissioners to resist parliamentarians when they organise raids on the Exchequer, but it is also the job of parliamentarians if they think something is worth doing as a matter of policy to impose their policy decision on officials who then carry it out.
I am amazed the Minister for Finance and the Minister of State at that Department have stitched into the record the arguments made last year. I know the burdens of office are onerous, but decent people who have strong political nous and a good sense of what is happening seem to leave that behind them as soon as they take up an official script. They put the official view taken from the word processor in the Department of Finance on the record. I ask Ministers in this Administration to exercise their political judgment on this because while many of the arguments put forward against the motion are valid they could be dealt with in the Finance Act.
One of the arguments is that if this proposal were introduced the cost to the Exchequer would be unquantifiable and would be a serious burden on it. The only estimate I have is that provided by the Irish Charities Tax Reform Group who engaged Fitzpatricks Consultants to carry out an assessment. They could not find a figure in our statistics in regard to the total amount contributed by businesses to charities in Ireland. They studied the position in European jurisdictions where in almost all cases business donations have the benefit of tax relief. They calculated the percentage of gross domestic product dedicated to the charities and applied that ready reckoner to the Irish position. In other words, they took the European average contribution, applied it to Irish GDP and came up with a figure of £11 million. However, because there is no tax relief in that regard here it seems the amount being contributed at present is much smaller. The figure of £11 million is a calculation of the post relief position and it is hoped that relief of £3 million to £4 million which would accrue to businesses on that level of donations might be included also as a further contribution to charities as the years go by. There is no suggestion that there will be a major burden on the Exchequer as a result of accepting this proposal.
We confined our proposal to tax relief on business donations. We know the difficulty that would arise if it were extended to personal donations. There is a great case to be made for extending relief to personal donations but the burden on the Exchequer would be much larger because the proportion of personal donations to business donations is 20:1, even though the sums might be smaller. There would be large administrative and Exchequer costs. I strongly advocate that the Minister should provide for this proposal in the Finance Bill.
The Minister of State said there is no definition of a charity and that frightful difficulties would arise because we would not know to whom this would apply. However, any eligible charity would have to have a CHY number. The same series of arguments were put forward when our Administration extended tax relief to donations made to charities operating in Third World countries. Last evening the Minister said there was hardly any uptake on that scheme, but we thought it would provide major funds to Third World countries. However, he said that there seems to be a very insignificant uptake on it. He was not able to provide a figure for the loss to the Exchequer in that regard, but it seems minimal. It is not beyond the ability of those who draft finance Bills to construct a section which would protect the Exchequer and target the types of charities we want to benefit. It need not apply to the 12,000 applicants or the 4,000 charities currently in operation. Conditions could be included in a Bill or by way of regulation subsequently.
If we are waiting for the Government to implement the recommendations of the Costello report, we will be waiting for a long time. Mr. Justice Costello recently announced his retirement. He was in the full flourish of his career when he compiled the report. Every party in the House and half the Deputies participated in Government since that report was published. There was no political will to implement its recommendations. It is only being waved around now as a shield to protect an Administration that is reluctant to take a step which, politically, its Members know they should take. This was discussed more recently on the committee chaired by the former Minister of State, Deputy Burton, when the same issues arose. This proposal should be included in legislation and regulatory power should be conferred on the Minister to decide the parameters of who the beneficiaries should be and the conditions that should apply.
We are looking for relief on business donations only and are not arguing that it should extend to personal donations. There should be cash limits on the amount a business could contribute and on which it could obtain relief. It would be silly to apply the relief to sums less than £100 because the bureaucratic difficulties involved would not be worthwhile or justified. The upper ceiling should be £10,000. The total amount contributed to charities in respect of any company for which relief would be allowed should be £5.000 or 10 per cent of the profits of the company, whichever is the smaller amount.
On the advice of the charities we on this side of the House are confining and focusing this proposal. It is not beyond the ability of the Minister's officials and the Revenue Commissioners to construct an appropriate section in the next Finance Act if the will exists. All the arguments that have been put forward were put forward in respect of tax relief for charities operating overseas which is now in statute law. All the arguments made in opposing it were made when that provision was introduced and the sky did not fall. The revenue losses were of such a minor magnitude that the Minister was unable to quantify them in his speech yesterday.
I ask the Minister of State, who I know is in full agreement with what I am saying, to use his influence — as Ministers of State frequently do — by adopting this as one of his pet projects for the budget and the Finance Bill and taking responsibility for ensuring there is a scheme in place. We will agree any series of valid provisions to ringfence this measure to meet the concerns of the Revenue Commissioners and officials in the Department of Finance. We want to target the measure towards the charities we are all talking about. We do not want it to go all over the place, to be used as a sort of scam or to apply to a series of contributions.
I thank the Minister of State for returning to the House and replying to the debate.
Amendment put.
The Dáil divided: Tá, 72; Níl, 51.
Tá
- Ahern, Bertie.
- Ahern, Dermot.
- Ahern, Michael.
- Ahern, Noel.
- Andrews, David.
- Ardagh, Seán.
- Aylward, Liam.
- Blaney, Harry.
- Brady, Johnny.
- Brady, Martin.
- Brennan, Séamus.
- Briscoe, Ben.
- Byrne, Hugh.
- Callely, Ivor.
- Carey, Pat.
- Collins, Michael.
- Cooper-Flynn, Beverley.
- Coughlan, Mary.
- Cowen, Brian.
- Cullen, Martin.
- Daly, Brendan.
- Davern, Noel.
- de Valera, Síle.
- Dempsey, Noel.
- Dennehy, John.
- Doherty, Seán.
- Ellis, John.
- Fahey, Frank.
- Fleming, Seán.
- Flood, Chris.
- Foley, Denis.
- Hanafin, Mary.
- Haughey, Seán.
- Healy-Rae, Jackie.
- Jacob, Joe.
- Keaveney, Cecilia.
- Kelleher, Billy.
- Kenneally, Brendan.
- Killeen, Tony.
- Kirk, Séamus.
- Kitt, Michael.
- Lawlor, Liam.
- Lenihan, Brian.
- Lenihan, Conor.
- Martin, Micheál.
- McCreevy, Charlie.
- McDaid, James.
- McGennis, Marian.
- McGuinness, John.
- Moffatt, Thomas.
- Moloney, John.
- Moynihan, Donal.
- Moynihan, Michael.
- Ó Cuív, Éamon.
- O'Dea, Willie.
- O'Donnell, Liz.
- O'Flynn, Noel.
- O'Hanlon, Rory.
- O'Keeffe, Batt.
- O'Kennedy, Michael.
- O'Malley, Desmond.
- O'Rourke, Mary.
- Power, Seán.
- Roche, Dick.
- Ryan, Eoin.
- Smith, Brendan.
- Smith, Michael.
- Treacy, Noel.
- Wallace, Mary.
- Walsh, Joe.
- Woods, Michael.
- Wright, G.V.
Níl
- Barnes, Monica.
- Barrett, Seán.
- Belton, Louis.
- Bradford, Paul.
- Browne, John (Carlow-Kilkenny).
- Bruton, John.
- Bruton, Richard.
- Burke, Liam.
- Burke, Ulick.
- Carey, Donal.
- Connaughton, Paul.
- Cosgrave, Michael.
- Coveney, Hugh.
- Crawford, Seymour.
- Creed, Michael.
- D'Arcy, Michael.
- Deasy, Austin.
- Deenihan, Jimmy.
- Enright, Thomas.
- Farrelly, John.
- Finucane, Michael.
- Fitzgerald, Frances.
- Flanagan, Charles.
- Gilmore, Éamon.
- Gregory, Tony.
- Hayes, Brian.
- Higgins, Jim.
- Higgins, Joe.
- Kenny, Enda.
- Lowry, Michael.
- McCormack, Pádraic.
- McGahon, Brendan.
- McGinley, Dinny.
- McGrath, Paul.
- McManus, Liz.
- Mitchell, Gay.
- Mitchell, Jim.
- Mitchell, Olivia.
- Naughten, Denis.
- Neville, Dan.
- Noonan, Michael.
- O'Keeffe, Jim.
- Perry, John.
- Rabbitte, Pat.
- Reynolds, Gerard.
- Ring, Michael.
- Shatter, Alan.
- Sheehan, Patrick.
- Stanton, David.
- Timmins, Billy.
- Yates, Ivan.
Tellers: Tá, Deputies S. Brennan and Callely; Níl, Deputies Barrett and Sheehan.
Amendment declared carried.
Motion, as amended, put and declared carried.