National's bold new tax policy on charities shows a National government will support private giving and is serious about backing groups doing important work in our communities, says National Party Leader John Key.

"This policy will give a big boost to the giving tradition in New Zealand. We want to encourage that culture of giving."

The policy will:

· Remove the $1,890 cap on charitable donations. Donations of any amount, up to an individual's total net income, will be eligible for the 33.3% rebate.

· Remove the 5% cap on the level of donations that can be deducted by companies and Maori Authorities, meaning they will be allowed to claim a deduction for any level of charitable donation. In addition, all businesses, not just publicly listed or widely held companies, will be able to claim deductions.

· Remove gift duty from donations to charitable organisations.

"The tax treatment of charitable giving is miserly compared to other countries," says Mr Key. "For example, Australia has no cap on charitable donations.

"Our changes will mostly benefit New Zealand-focused charities, but the rebate will also apply, as it does now, to many overseas aid organisations.

"National estimates the policy will result in foregoing revenue of around $60 million to $90 million a year.

"However, the benefits for the sector are huge given that for every dollar rebated, the charitable sector gains $3.

"The existing level of donations is about $350 million a year. If National's policy sees donations increase as much as we estimate, then donations will increase by a further $300 million – nearly doubling the amount that goes to the sector.

"Understandably, New Zealand charities are likely to feel excited by the tremendous potential boost that this policy offers.

"In my Burnside speech I said I wanted to turbo-charge the efforts of private and community groups making a difference. This policy shows I mean it.

"Following that speech, Labour's Steve Maharey attacked National using the sneering term 'Tory charity'.

"This is the view that the State is always best placed to improve society by taxing people and spending the money on government programmes. This is the view that private charity is simply patronising.

"National thinks these views are appalling. It's a fundamental part of a civilised society that people do things for one another, and do them selflessly, without being compelled, and without the Government organising it.

"Unlike Labour, I don't think that more government is the solution to every social ill."

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