Tax Breaks Do Encourage Charitable Donations, But Need Adjustment

May 18, 2016 International Tax Cooperation

Calculator and MoneyLONDON – Tax breaks for charitable giving need to be easier to access in order to encourage greater levels of charitable giving around the world.

Tax incentives for charitable donations are an effective method of encouraging greater levels of giving, however, in many countries, the process of claiming tax credits is often aimed at corporations and wealthy individuals, according to the results of new research released on May 17th by the UK-based Charities Aid Foundation (CAF).

It is estimated that two thirds of countries in the world offer some form of tax incentives for donations to charities.

Tax incentives greatly increase the chance that donations would be made to charities, with taxpayers being 12 percent more likely to make donations of tax incentives are on offer.

However, it was noted that in many cases the tax incentives are either targeted at wealthy individuals, or are difficult to claim, a move which inflicts “long-term damage on charities and discouraging giving by the majority if incentives are perceived to be unfair.”

Further, the research found evidence that in some countries, tax incentives for charitable giving are restricted to causes and organizations which are in direct support of the government’s own views, and “such favoritism risks damaging the long term development of a healthy civil society.”

In the report, the CAF suggested that government try and ensure that the process of claiming tax incentives for donations is not skewed to any particular group or cause, and that the process is made easy.

Photo by Images_of_Money

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