The cost of VAT on charities

Death and taxesDeath and taxes

IHF Tax AgendaIHF Tax Agenda•Introduce sugar sweetened drinks tax•Tobacco Tax escalator•Tax changes to reduce tobacco industry profits•Minimum alcohol pricing better than tax hikes•Refund VAT on Charities•Refund VAT on defibrillators•Refund VAT on nicotine replacement therapy

Tax on saving Tax on saving liveslives

• 125 lives saved annually from use of defibrillators. VAT at 23%. So the State charges for the privilege of saving a life.

• Government says VAT governed by EU law and can’t be reduced or abolished. Also no refund orders since 1980s.

•Conceded that refund for “individuals to overcome a disability”, but not for charities, clubs and other organisations.

• EC says Government can give grants to groups.

• Government lamely replied that funding “separately available” to groups that provide defibrillators.

VAT on NRT VAT on NRT -80% of smokers want to quit.

-State takes €1.2 billion from them in tax each year.

-Spends 1% of that helping smokers quit.

- To add financial insult to financial injury, people trying to quit must pay 23% on their NRT.

Of course for a powerful enough lobby, the rules can be different. In the last Budget Minister Noonan announced:

• An increase from 5% to 5.2% in the Flat-Rate scheme compensating unregistered farmers for VAT incurred on their farming inputs.

• Retention of the 9% reduced VAT rate introduced in 2011 as part of the Government Jobs Initiative for tourism related services, is being retained.

Exceptions for Exceptions for some...some...

Charitable Charitable exemptionsexemptions

- Accessible transport for people with disabilities

- Some aids ands appliances, ie stair lifts- Small rescue craft purchase repair and upkeep- Goods for humanitarian, charitable or teaching

activities abroad- Donated medical or research equipment

These introduced between 1980-95. Ernst and Young report for ICTR concluded they must be result of successful lobbying.

I

Vat on CharitiesVat on CharitiesCharities pay an effective ‘levy’ of unreclaimable VAT on activities such as capital expenditure, fundraising, promotion, essential equipment, professional fees and overheads. This:

• Reduces capacity to deliver services at home and abroad.

• Is a disincentive to giving.• Promotes reliance on State grants.• Increases fundraising costs.• Taxes good governance

Irish Heart Irish Heart FoundationFoundation

IHF raises €5 million a year from fundraising activity. Annual State funding of around 300k for health

promotion.

Almost 10% of fundraised income – 450k – goes to pay VAT mainly on advertising, print and design etc on

the information and awareness campaigns that are our main Activity.

So, we’re a net funder of the State beyond our normal tax obligations.

FAST campaignFAST campaignFAST crucial to reducing strokedeath and disability.

Better outcomes also saving State €22 million a year.

Of campaign costs totalling 525k– around 125k went to the State.

Since TV element of campaign ended numbers in time for clot busting treatment reduced.

Impact on OthersImpact on Others• SVP incurs around €3.5 million in VAT annually – vitally need for food,

fuel, education, shelters, resource centres etc.

• Build4Life will incur around €500,000 for providing outpatient clinic and inpatient ward services for adults and children in CUH

• Irish Cancer Society paid €900,000 last year – more than the cost of the national Cancer Information Service

• Focus Ireland’s VAT on independently raised funds was €266,000 last year – the cost of 6 project workers providing vital services to some 180 homeless adults and children.

• MS Ireland paid € 106,300 last year – the cost of a a full-time physiotherapist and full-time MS Nurse.

• Pieta House paid over €45,000 in VAT on costs related to their ‘Darkness into Light’ fundraiser – more than double its spend on essential computer equipment in 2014.

Based on a representative sample of 218 charities comprising 120 members of ICTR and a random sample of 98

Overall impactOverall impact