UK Politics

George Osborne: We got it wrong on charity tax

George Osborne
Image caption When you are in a hole it is better to stop digging, Mr Osborne said

Chancellor George Osborne has told the BBC that the government "got it wrong" on its proposed changes to taxation on charitable giving in the Budget.

He defended the U-turn on the proposal, telling BBC Radio 4's Today that "sometimes the only thing worse than listening is not listening".

Mr Osborne said the leaking of some of his plans prior to the Budget statement in the Commons had been unhelpful.

It had been difficult to balance deficit cuts with tax reforms, he said.

"Potential losers notice more than potential winners," Mr Osborne noted.

At the moment there is no limit to tax relief on charitable donations, so it is possible to donate enough money to charity to bring a tax bill down to zero.

The government had wanted to introduce a cap from 2013 of £50,000, or 25% of a person's income if that was higher.

Charities warned that the plan would reduce their income.

'Battles worth fighting'

The government also came under fire for other measures in the Budget which became known as the pasty tax and the caravan tax. It subsequently altered these plans as well.

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Media captionOsborne: Government "not too embarrassed to put down the shovel and climb out" of a hole

Mr Osborne said that collectively these proposals amounted to "less than 5%" of the Budget".

The "bulk" of the Budget had survived, he added, hailing the decision to raise the threshold at which the bottom rate of income tax is payable.

"Tax reform, when you don't have a lot of cash around, is difficult," Mr Osborne said.

But he claimed he had learned from the mistakes of his predecessors, who had found their Budgets to be unpopular: "Most of the errors occur when politicians keep digging."

On the charity tax, the chancellor conceded: "We got it wrong. So I thought it much better to say that we just won't do it."

He pledged to "fight the battles that are worth fighting".

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