The intellectual underpinning of tax incentives is that they allow individuals a measure of choice in funding public goods. Practically, it’s often argued that tax incentives significantly increase the amount of philanthropy – especially where giving is low – by encouraging donations. But the evidence is mixed at best. If incentives positively affect donations, the knock-on effects may aggravate existing inequalities. In developed countries (for want of a better term), it’s unlikely that tax incentives will have much effect on small, out-of-pocket givers. Incentives are only significant for large donors.

Questions around taxation and philanthropy are many. Should we really be offering inducements that only the rich can take advantage of? If they are rich, should they not be paying a full share of tax and, if they choose to, do philanthropy? How should we think about tax incentives? Should countries that operate tax incentives introduce a graduated set of incentives or a cap? (A paper by the OECD suggests this as one possibility). Should we abolish tax incentives altogether and take the position that philanthropy is welcome but should not be at the expense of the public purse?