Nick Clegg defends charity tax limits

Nick Clegg defended plans to cap tax relief on charitable donations today (Justin Sutcliffe)

Nick Clegg defended plans to cap tax relief on charitable donations today, insisting there had to be "some limit" to an allowance effectively funded by lower earners.

Amid fury from charities that claim the Budget measure will hit philanthropic giving, the Deputy Prime Minister said he made "absolutely no apology" for changing the tax system so that "everyone pays their fair share".

His justification for the move struck a markedly different note from that of Chancellor George Osborne, who has spoken of the need to tackle tax avoidance by some of the country's highest earners.

"I'm not saying people make contributions to charities to avoid tax - of course not, of course not," Mr Clegg told BBC Radio 4's Today programme.

"What I am saying is that it is very rare in the developed world to have allowances in your tax system which are completely unlimited.

"There is a simple principle at stake, which is that if you have an unlimited allowance, you are asking ordinary taxpayers on much lower incomes to fund that tax break.

"Of course, as we said at the Budget, we will look at this in detail, we've got time to get the details right, we will look at it in the round and very sympathetically, because we don't want to damage charities or inhibit philanthropy.

"But that doesn't mean that the principle of saying there should be some limit to what are taxpayer-funded allowances in the tax system as a whole isn't something which is sensible."

Mr Clegg said the "centrepiece" of the Budget was the raising of the income tax threshold for basic-rate taxpayers, which he described as "one of the biggest, boldest and most radical changes in the personal tax system for a very long time".

"I acknowledge that it's been somewhat lost in some of the coverage of the Budget since it was announced, but the centrepiece remains a huge change in the personal income tax system which will benefit over 20 million basic-rate taxpayers to the tune of several hundred pounds," he said.

Mr Clegg said that dealing with the 2008 "heart attack" in the economy meant decisions had to be taken now which "generate anxiety and may even generate anger".

"But at the same time, we are doing things which help millions of people," he said.

Asked about the coalition Government's increase in university tuition fees - a measure the Lib Dems pledged to oppose before the general election - Mr Clegg said he had to make "painful compromises" as the leader of only the third largest party.

"If you want the Liberal Democrat manifesto in full, vote for Liberal Democrats in larger numbers. It didn't happen, and I have to deal with the world as it is, not as I'd like it to be.

"I'd love to be Prime Minister, I'd love this to be a Liberal Democrat government, but it isn't and no one can accuse me of failing to be upfront about the fact that there are painful compromises where you can't do everything."

Mr Clegg said he was proud of Lib Dems in the Government who were being "courageous and bold".

Asked whether he was enjoying it, he said: "Yes, it's a great privilege. Of course it's tough, but I feel genuinely privileged that I am playing a role, as other people are, in making sure this country is strong, prosperous and safe in the future."

PA