Melanie Phillips

THE sound of ministerial retreat is once again loud in the land. It appears that in the face of gathering outrage, the Government is rethinking its Budget proposal to cap tax relief on charitable donations.

More than 2,000 charities and individuals have joined a campaign against this plan. At the weekend, dozens of philanthropists from the arts, education and business wrote that it may deter future charitable donors.

In response to the uproar, we are being told that Treasury officials are looking at an American scheme to encourage charitable giving rather than discourage it.

And this week Deputy Prime Minister Nick Clegg will be in full damage limitation mode at an event billed as celebrating philanthropy.

In other words, sheer panic- stricken chaos — the latest fall-out from George Osborne’s disastrous Budget.

But this particular debacle is especially hard to understand. The Treasury claimed it wanted to prevent abuse by rich people who were using charitable donations to minimise their tax bill.

Feeble

Rub your eyes. A Conservative Chancellor smearing as tax dodgers, cheats and shysters those who choose to give away their money to worthy causes. There is scant evidence of such abuse.

And as the Tory MP Zac Goldsmith noted in a double-barrelled blast against the proposal, if ‘giving’ really were a ploy to hoard money it’s pretty feeble because the philanthropist would be vastly better off not giving anything at all.

The Government’s plan risks a catastrophic impact upon the arts, universities and academy schools, which are heavily dependent upon such benefactions.

So how on earth can it have got itself into quite such a mess?

like the rest of the Cameron inner circle, the Chancellor George Osborne has become fixated by the need to be seen to be hitting the rich. The root of this lies in the modernisers’ obsession to ‘rebrand’ the Tories as no longer the party of the well-off — and in their related drive to bury forever their own image as public schooleducated toffs.

As a result, they have unscrupulously played upon the ugly mood which can develop in times of austerity, in which those feeling the pinch turn on the better off and blame them for all economic woes.

Hence all the banker and bonus-bashing and the growing pressure on MPS to reveal their tax arrangements.

Such public fury has provided the Treasury with a heaven- sent opportunity to rake in yet more money under the supposedly virtuous guise of soaking the rich. This cynical strategy, however, has gone pear- shaped many times over. The Government is supposedly committed to encouraging philanthropy to underpin its Big Society idea of local services provided by voluntary bodies rather than the state.

Yet it proposes to punish precisely those charitable acts. Such incoherence suggests that no one at the Treasury, at least, takes Mr Cameron’s much-vaunted Big Idea remotely seriously.

Either Mr Cameron has thus been undermined by his Chancellor or neither of them ever intended the Big Society to be anything other than a soundbite to answer the complaint that they seemed to have no Big Idea at all.

As for the supposed move towards tax transparency, that has immediately boomeranged. Nick Clegg has made a complete idiot of himself by stating that moves to disclose politicians’ financial affairs should not be extended to their spouses and families — including his own wife, a senior partner at a big law firm.

Yet putting your affairs in the wife’s name is a well-known form of tax avoidance.

Mr Clegg said there needed to be ‘limits’ on transparency to avoid an American– style media ‘frenzy’. Oh really? Just enough transparent frenzy for the lib Dems to indulge in their favourite pastime — egregious and rabble-rousing hypocrisy.

Offensive

There is, in any event, a good reason for the difference between tax evasion and tax avoidance. Criminalising the former is necessary to avoid dishonesty. Permitting the latter is necessary to protect people from being oppressed by an intrusive society that allows no privacy.

It’s not a matter of having nothing to hide if you are doing nothing wrong. It is that privacy within the law is essential in a free society.

The deeper and more general point is that bashing the rich is simply wrong because of the deeply offensive and false assumption that underpins it.

This is that people who are wealthy are automatically bad because wealth is inherently disproportionate and necessarily represents the fruits of indolence, parasitism or outright fraud.

Well, of course sometimes this may be the case. But as often as not it is the result of someone working their socks off, possessing great entrepreneurial skills or taking tremendous personal risks, which may pay off but could just as easily plunge them into financial ruin.

So bashing the rich is actually bashing the strivers in society, those who work hard and try to achieve a better life for themselves and their families.

In other words, the very people most likely to be resentful of the inherited wealth and privileges of the likes of Messrs Cameron and Osborne are those who are effectively being told that if they claw their way up into prosperity, they will promptly be treated as social pariahs and the Treasury will grab yet more of their hard-earned money.

It is right that those who have more should shoulder more of the burden of paying for the common good than those who have less. But the soak-the-rich brigade totally disregards the fact that such people already do pay hugely more.

Greedy

Indeed, the top 10 per cent of earners stump up more than half the country’s taxation yield.

One of the more attractive aspects of Mr Cameron has always been his apparently optimistic and sunny disposition. This suggests a benign view of human nature — a belief that, especially if freed from the demoralising grip of the state, people can be relied upon to do the right thing by each other.

That is why it is so disappointing that he appears to be fanning the flames of the politics of resentment in this way.

For the bash-the-rich agenda is based on a profoundly sour view of human nature, a belief that people are basically selfish, greedy and rapacious and have to be controlled (by those who are, of course, unchallengeably good and virtuous and wise, aka the left.)

It is a view of the world that is not only unpleasant and objectionable but is also inescapably self-defeating. I don’t believe Mr Cameron shares it for a moment. But his administration has sought to make cynical use of it, which scarcely provides much comfort.

Even if the Government does water down its plan to cap tax relief on charitable giving, this will do little to erase the bad smell from this cynical smearing of good deeds.

For Mr Cameron to get back on track, he has to ditch the bash-the-rich mantra — and vigorously promote instead the generation of wealth in the interests of the entire nation. But for that to happen, he has to jettison his neurotic obsession with pretending to be something he is not.

It’s not what you are, Prime Minister — it’s what you do that’s so important. Promote wealth for individuals and the nation, and the people will be with you.

Pander to the politics of resentment and you will earn nothing but contempt for cynically playing politics with Britain’s prosperity — and with some of the most decent and generous instincts of its people.

m.phillips@dailymail.co.uk