- guardian.co.uk, Wednesday 22 March 2000 21.19 GMT
Charities last night expressed severe disappointment about a budget that offered incentives to boost donations but did little to tackle their biggest problem: a £400m annual VAT bill.
Gordon Brown extended tax relief for gifts to cover a wider range of shares and allowed non-residents to make tax-free donations.
He also extended VAT exemption to more fund-raising events and broadened the VAT zero rate for the sale or hire of donated goods.
Oxfam said the changes would "help us raise a lot more money". But other groups said the help was fatally undermined by not properly tackling the growing VAT problem. The Charity Tax Reform Group, which has represented 350 leading charities in talks with the chancellor, said Mr Brown had concentrated on piecemeal reform.
"We are very happy with the changes to payroll giving and gift aid but we are left with the fundamental problem of VAT which we have been campaigning to change since the 1980s," said Alison Cornell, the group's spokeswoman.
VAT is paid when charities spend money, for example, on a minibus for the elderly. Because there is no charge to the users, the VAT element cannot be passed on or recovered.
Similarly, the maintenance of residential buildings incurs significant VAT bills. Help the Aged pays £500,000 a year in this kind of tax.
Mr Brown said all voluntary organisations and charities would benefit from the tax reforms announced last autumn. From April 6, for every pound a taxpayer gives to charity the government will add 28p.
