Tax Proposals - "A Sledgehammer To Crack A Nut"
Citizens Advice Bureaux Slam Tax Proposals As “Using A Sledgehammer To Crack A Nut”
Citizens Advice Bureaux today strongly criticised as an ‘overreaction’ proposals to tighten the taxing of charities.
Nick Toonen, CEO of the New Zealand Association of Citizens Advice Bureaux, was responding to the Inland Revenue Department’s discussion document on tax and charities.
“The whole tax and charities review seems to be based on a concern that a few border-line charities have benefited from the current tax laws, and largely ignores the importance of these benefits to charitable community organisations such as Citizens Advice Bureaux.
“It’s hard to be clear on the impact of the proposed changes on Citizens Advice Bureaux, and in the absence of any clear benefits we feel the changes are unnecessary.
“The review appears to want to use a sledgehammer to crack a nut. We suggest Government should refrain from withdrawing vital support to community organisations and focus instead on weeding out those few charities that they feel are not doing the right thing.”
According to Mr Toonen, the review has also got things back to front when it describes Government as providing a subsidy to charitable community organisations.
“It is ironic that the discussion paper presents a view that Government, through taxation, subsidises the community sector, a sector that is run and staffed largely by volunteers.
“We think the whole premise for Inland Revenue’s review of the tax laws in relation to charities is false. Their proposals are based on the assumption that charities exist to provide welfare services on behalf of the government. This ignores the fact that charities emerge when people organise to respond to community needs, and as part of meeting those needs seek some support from government.
“The estimated dollar value of our 2,700 volunteers’ efforts is well over $10 million each year. While we are one of the largest voluntary organisations in the country, we are just one of an enormous number of groups providing services to the community based on the work of volunteers. So who is subsidising whom?” said Mr Toonen.
The review proposes tightening up which charities have tax-exempt status by changing the definition of ‘charitable purpose’. Mr Toonen says that that this will place greater burden on organisations working on meeting a diverse range of needs in the community with limited resources and mainly volunteer workers.
“If these proposals go ahead, there will be situations where a charity’s tax-exempt status will be taken away if it does not meet the Government of the day’s own criteria. Citizens Advice Bureaux won’t know from year to year whether we will have tax exempt status. So while the charity is meeting community needs that are often overlooked by Government, Governments may be stripping away crucial support.
“While the review has come up with some useful proposals, we strongly feel Government should stick with the status quo, and instead continue to focus its energy on working with the community sector in its vital role supporting individuals and communities.
“We are surprised these proposals have been made in the International Year of Volunteers, when the existing definition of ‘charitable purpose’ has served communities, governments and charitable voluntary organisations very well for over 400 years.”