Almost one in 10 people earning more than £10m a year is paying less than the 20 per cent basic rate of income tax, says the Treasury in defence of plans to cap tax breaks on charitable donations.
Amid growing criticism of its plans to cap tax relief on charitable donations, the Treasury on Monday released figures showing the number of millionaires paying minimal levels of tax.
It said that the figures for the first time showed the need to prevent the super-rich from exploiting a system of tax relief to reduce their tax bill.
The Treasury said that 6 per cent of £10m-plus earners paid less than 10 per cent in tax and another 3 per cent came in below the basic 20 per cent rate. Fewer than three-quarters paid more than 40 per cent.
However, there is growing concern among government backbenchers and charities, who have condemned the proposal to cap tax breaks on philanthropic giving.
Tory treasurer Lord Fink, himself one of the most generous supporters of charity in the UK, has also waded into the debate saying that the change would inevitably put off other wealthy philanthropists from giving as much.
This is the system we have at the moment, but the government is committed to making it fairer. We're capping benefits and these figures clearly show why it's fair to cap tax reliefs for the wealthy as well. Treasury spokeswoman
A poll found that almost two-thirds of Conservative and Liberal Democrat MPs are opposed to the measure announced in last month's budget. Of 71 coalition MPs asked by from ComRes on behalf of the Charities Aid Foundation, 46 agreed that charity donations should not be subject to the new limit, with 15 supporting the policy and 10 not expressing a view.
Tory MP Zac Goldsmith said he was "ashamed" his party appeared to have "declared war" on the very people who should be at the heart of the government's "big society" project.
It is 'fair' to cap tax relief
Foreign Secretary William Hague led the defence of the move, insisting the cap was designed to fix a genuine problem of top earners exploiting the system to pay almost no income tax.
Amid reports that the Treasury was considering alternatives, Mr Hague repeated an assurance from the prime minister that the concerns would be considered "very sympathetically".
A Treasury spokeswoman said: "There are currently millionaires paying a lower tax rate than ordinary taxpayers.
"This is the system we have at the moment, but the government is committed to making it fairer. We're capping benefits, and these figures clearly show why it's fair to cap tax reliefs for the wealthy as well."
11 April 2012
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