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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.”
[Click
here for a copy of the submission]
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