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Last Updated: Tuesday, 12 February 2008, 18:09 GMT
MP Field's 'tax or charity' call
Frank Field
Mr Field called for a more radical approach to taxation
The "super rich" should pay 10% more tax on earnings over 150,000 or give the same amount to charity, senior Labour MP Frank Field has proposed.

Mr Field, MP for Birkenhead, said his proposals would fulfil Margaret Thatcher's dream of a "giving culture".

He said his hope was to "breathe life into this noble aspiration".

The former welfare minister suggests the move could raise 3.6bn a year. It comes amid controversy over plans to tax wealthy "non-domiciled" people.

Mr Field said the idea came from a conversation he once had with Baroness Thatcher, who said she had always been puzzled that her tax cuts did not lead to more charitable donations and philanthropy.

He denied it would be a "stealth tax" as the money would be diverted to charities and not be used to increase public spending.

'Stealth tax'

Entrepreneurs would also be encouraged to "not just give some of their riches but to give something of themselves" in the form of knowledge and expertise, added Mr Field.

"It's quite clear that some of the people who have made extraordinary fortunes over the last 10 or 20 years have done so not just because of the tax changes but because of their extraordinary entrepreneurial skills," he told BBC Radio 4's PM.

Mike Warburton, chief tax partner at accountants Grant Thornton, welcomed a debate on increasing the amount of tax the wealthy can write off by giving to charity.

But he warned that making it compulsory would be seen by the wealthy as a "stealth tax" - and suggested a "halfway house" might be found to encourage more giving.

"Past errors have shown that if you have high levels of taxation it does stunt enterprise and enterprise is something that I think we have seen a great development in in this country," he said.

Mr Warburton said many of his company's wealthy clients would welcome the chance to put something back into society - provided it was not through the tax system, which they saw as wasteful.

"The vast majority of my clients would, frankly, rather give money to a charity where they know what it's going to be used for than to central government where it's seen as amorphous and a number of them see money as being wasted, in their view," he told PM.

'Philanthropic'

Mr Field earlier set out his ideas, which he dubbed "acceptable behaviour contracts for the super-rich", in the annual Allen Lane Foundation Lecture.

He said: "On one occasion, Mrs Thatcher expressed her surprise to me that a giving culture had not been re-established in the wake of her government's radical tax-cutting strategy, which saw the top rate of tax cut from 98p to 60p and then to 40p in the 1979 and 1988 budgets.

"Mrs Thatcher anticipated the advent of an American model of philanthropic donation that would significantly change British public culture.

"While there have been some notable exceptions, Mrs Thatcher's hopes lie stillborn."

Mr Field, a former welfare reform minister, added: "Here I suggest that a more radical approach to tax changes could be used to breathe life into this noble aspiration; a 10% surcharge on earnings above 150,000 which can be totally offset by charitable giving."

He said such a levy could raise 3.6bn a year for the Treasury.

John Wesley

Mr Field went on: "This could encourage richer taxpayers to embrace the responsibilities of wealth that were, for example, such a characteristic of an equally flamboyant and rich Edwardian age.

"As John Wesley was fond of commending, while we should make as much money as we can, we should, likewise, give money away in equal proportion."

Since coming to power in 1997, Labour has rejected calls to increase taxes on the wealthy, although some ministers, such as environment secretary Hilary Benn, have made the case for more charitable donations.

On Friday, Trade and Industry Minister Lord Jones said London's leading role in global finance could be damaged by plans to tax "non domiciles" - wealthy individuals who have homes in the UK for tax purposes.

The Treasury plans to charge 30,000 a year to foreigners who have claimed tax-exempt status on their overseas earnings for more than seven years.

Lord Jones said the proposals would make it harder to attract investors and business people to London.



SEE ALSO
Minister says tax plans hurt City
08 Feb 08 |  Business
Warning over super-rich tax rates
11 Sep 07 |  UK Politics
MP calls for early school leaving
15 Nov 07 |  Merseyside

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