Dáil Éireann debate -
Tuesday, 13 Oct 1998

Vol. 495 No. 1

Adjournment Debate. - Charitable Status.

Mr. Sargent

I want to draw attention to the valuable and priceless work being done by more than 10,000 voluntary community and non-profit organisations throughout the country, at local and national level. Many of these have charitable status in tax law but some do not. Charitable status is important in terms of the morale of the organisations and also in practical ways, such as legal exemption from DIRT, which is an asset to any organisation fund raising in the USA in particular. In the last few years the large organisations raised funds from business under section 61 of the Finance Act, 1998, and from a local credit union under section 44 of the Credit Union Act, 1997.

What is remarkable about charitable status in this era of freedom of information is the secrecy that surrounds it. Many worthy organisations carry the words "registered charity" on their headed paper. In Ireland there is no such thing as a registered charity; there are only organisations which the Revenue Commissioners have decided, in secret, have charitable status in tax law.

Through the operation of revenue foregone, every organisation that has charitable status is subsidised by the ordinary taxpaying man and woman. The ordinary PAYE taxpayer is denied access by the Revenue to information on who are the beneficiaries of this subsidy. Potentially the absence of a register of charities and the failure of successive Governments to provide for the appointment of a registrar of charities creates a problem for charities in which the Director of Consumer Affairs, who has responsibility for the accuracy of advertising, might take an interest. The crux of the issue is the question of secrecy, as provided for by a former Taoiseach and Minister for Finance, Mr. Charles Haughey when framing the Income Tax Act, 1967.

In recent days we have witnessed the effects on the pockets of ordinary taxpayers of the Revenue acting in secret. In the case of AIB, the Revenue appears to have made decisions in private which cost ordinary taxpayers over £80 million. I have failed to get from the Minister for Finance, despite persistent questioning by way of parliamentary questions, an estimate of the cost to the Exchequer of the operation of charitable status in the period since 1967. Most of that Exchequer cost would have the whole hearted support of the public but because of the culture of secrecy within which the Revenue has exercised its discretion in relation to its charitable status, we do not know, for instance, whether, in the late 1960s and right up to the time of the establishment of the Costello Committee of 1989, charitable status may have been used indirectly to facilitate party political fund raising. Secrecy breeds suspicion. We have witnessed time and again, regrettably, that where the public is not vigilant, abuses — such as the Goodman scandal, the AIB scandal and various scandals associated with Fianna Fáil Administrations since the late 1960s — have proliferated. Thus the cloud of secrecy around charitable status is a scandal waiting to emerge.

What is needed is the publication of a compendium of all organisations which have been granted charitable status since the passage of the Income Tax Act, 1967. Nothing less will do. I challenge the Minister to come clean and to publish that list before Christmas. There is a precedent for such a publication in the compendium of national lottery grants 1986-96. This is nothing new. We need the immediate publication of a register of all organisations currently active which have charitable status and the immediate appointment or designation pro tem of a registrar of charities or charities commission. Failure to act on these three requests will add to the suspicion of what is in progress.

The Government will have many questions to answer when the tribunals begin their public work in the near future and in the interests of those charitable bodies that are legitimate and honest, it should move without delay to ensure that order and transparency are brought to bear on an area that has for too long been the preserve of an administrative inner golden circle.

Minister of State at the Department of the Marine and Natural Resources (Mr. Byrne)

There are certain tax advantages available to organisations that are considered to be charitable bodies. A charity is defined in the tax legislation as any body of persons or trust established for charitable purposes only. The tax legislation does not define what charitable purpose is but the courts over the years have defined four categories of charitable purpose as follows: the advancement of religion, the advancement of education, the relief of poverty and other purposes beneficial to the community not falling within the three other categories. Any group of persons or trust that wishes to obtain charitable exemption from certain taxes must apply to the Revenue Commissioners who operate under the particular criteria to which I have referred.

If a body is given charitable exemption by the Revenue Commissioners that body is entitled to exemption from income tax, corporation tax, deposit interest retention tax, capital gains tax, capital acquisitions tax, stamp duty and probate tax. These tax benefits are substantial and are of considerable assistance to charities in the State.

This year, the Minister for Finance introduced a tax relief for donations by companies to eligible charities. The relief is available for donations to any single charity between £250 and £10,000. There is also a cap on the total amount that a company can donate in total to charities in any one year. This is the lesser of either £50,000 or 10 per cent of the company profits in any accounting period. To be eligible for this relief the recipient must be established for charitable purposes only, apply its income for that purpose and have been exempted from taxes under the Revenue rules for at least three years.

Information is not published generally on who has charitable status under tax rules. The view is taken that this is a matter of an individual body's tax affairs. This issue was raised in parliamentary questions asked by the Deputy and answered on 30 September 1998.

Mr. Sargent

It is a matter of public interest.

Mr. Byrne

As pointed out in that reply the question of whether more general information, such as details of tax exemptions granted to taxpayers should be made available to the public by the Revenue Commissioners, has come up for decision under the terms of the Freedom of Information Act, 1997. That Act provides for the non-disclosure of information given to a public body in confidence where disclosure would be likely to prejudice the giving of further similar information to that body from the same person or other persons.

The Revenue Commissioners' view is that the non-disclosure of information they receive in confidence in the ordinary way from taxpayers, including information received in the course of applications for exemptions, is an important element underpinning voluntary compliance with the tax laws and in maintaining public confidence in the system.

However, the matter of releasing the names and addresses of bodies granted exemption as charitable bodies is being adjudicated on by the Information Commissioner who is responsible for reviewing decisions not to release information under the Freedom of Information Act. The Information Commissioner will decide whether the maintenance of the confidentiality principle in this particular matter outweighs any public interest concerns.

In the case of those charitable bodies who are eligible to accept tax relieved donations under the scheme which the Minister introduced in the 1998 Finance Act, the Minister did provide for the names of those bodies to be published by the Revenue Commissioners and these are being sent to the Deputy. There are 215 such bodies on the list.

The Deputy should be aware that the role of the Revenue Commissioners in relation to charities is confined to consideration of applications from bodies of persons or trusts claiming exemption from tax on the basis that they are established for charitable purposes only. The issue of the general regulation of charities and the question of the appointment of a registrar of charities is the responsibility of the Minister of Justice, Equality and Law Reform.

I understand from our colleague that the report of the Costello committee on fund raising activities for charitable and other purposes included recommendations in relation to registration arrangements for professional fund raisers and consultants. A subsequent advisory group on charities fund raising legislation also made recommendations on this matter. The implementation of these reports is also a matter for the Minister for Justice, Equality and Law Reform. The reform of the law in this area is included among the items in his legislative programme. While it is not possible to give any firm indication when proposals for a Bill might be ready for submission to Government, it is the intention that work will proceed as quickly as possible in the light of the disposal of other legislative priorities.

Since the appointment of a registrar of charities on an interim basis would, in itself, almost certainly necessitate legislation, I am not sure how this would achieve the result which is intended. In the circumstances, and in view of the decision being awaited under the Freedom of Information Act, I do not believe the sort of interim measures called for are required. I trust this clarifies the mater for the Deputy. My clinic is available to him.