Sunday, May 07, 2006

On privatising development aid

Wulfbeorn Watching, one of the neo-con "Freedom Institute" types, posts today on development aid and charity. He cites this Scotland on Sunday article, but I bet he has one eye on Dick Cheney's tax return as well. The problem with unlimited tax refundable charitable giving is essentially it allows rich people to avoid income redistribution to poor people by aiding organisations which prinicipally cater to rich people - think of all the museums, ivy league universities and symphonies in the US with huge subscription fees and boards stuffed with socialites. In Cheney's case, US$8.8m was reduced to $2m taxable income.

Even if Wulfbeorn's idea was adopted, the total US ODA possible is only 0.35% of GDP (0.16% govt and the rest private), which would barely reach the EU average of government only aid cited in the article. Bill Gates' foundation alone is overshadowing the entire federal government aid programme.

In Ireland, the most obvious problem in encouraging private gifts is the requirement to give 250 Euros before tax relief is given. In Canada, you can get tax relief on a C$5 (3 Euro) donation if you get a tax receipt. In Ireland, the beneficiary is the organisation donated to, which I suppose is better as it stops people patting themselves on the back for giving $1000 when they are getting maybe $300 of that back in their tax return.

So here's my prescription: for private donations, make everything above, say, 10 Euros at a time earn a tax credit at the lowest tax rate. This would mean fundraising for local schools and hospitals would become tax deductible and would be a boost for University alumni funds from recent graduates who don't have much disposable income because of paying off student loans. This encourages philanthropy, especially at the most local level, without seriously damaging the tax net.

By encouraging this kind of giving and getting away from the "bucket at the traffic lights" you are probably helping prevent road rage and traffic congestion. Instead of buckets and annoying schoolies yelling "Support SHARE pleeze!" on Cork's Patrick Street they could have stands at appropriate intervals with a bucket on it but tax forms as well.

Wulfbeorn is critical of those charities who declare their income in a way that funding costs are divided so government money is devoted to projects while private donations fund running costs. I actually have no problem with that, as private donors are far more likely to exert workable pressure on running costs than grant awarding bureaucrats. Perhaps such charities could be required to print their income/expense account for the previous year on the back of their tax forms.

As for government development aid, many immigrants to Canada speak of schools set up in their home countries with Canadian government money. Ireland should never go down the road of those countries who demand reciprocal agreements such as power dams or arms sales in return for its money, but it should require all projects funded via Government money directly as well as via NGOs to carry a plaque noting Irish taxpayer participation, just as our roads are festooned with 12 stars on a blue background, building. Here's the Canadian logo which usually plastered all over Canadian movies and the Montreal Grand Prix - I would have uploaded it but I didn't want to get a cease and desist letter from Treasury Board.
Post a Comment