The Coalition Government could hardly have got it more wrong.

In their zeal to tidy up anomalies in the tax system they have already upset pensioners with the "granny tax" and caused ludicrous argument over the temperature of sausage rolls by imposing VAT on hot food. Now they have put charities at risk of losing hundreds of millions of pounds by alienating many of the country's most generous supporters of good causes.

None of this passes the common-sense test and ministers' attempts to justify the changes have made matters worse. The latest episode in this unedifying tale of a Government clutching at straws is particularly damaging. As more philanthropists and charities, universities and arts institutions joined the criticism of the ceiling of £50,000 or a quarter of income on charitable donations eligible for tax relief, David Cameron said some people were using charities established in other countries to "funnel" money so that they paid income tax at 10p or 20p in the pound and George Osborne said he was shocked by the extent of abuse of the system.

These comments have under-standably angered philanthropists who have given millions of pounds to genuine charities and now fear that instead of their generosity being appreciated, they will be reviled as tax dodgers.

If a loophole in the regulations is being exploited in this way, it should be tightened but the Chancellor's remedy is, as Sir Ian Wood tells The Herald today, "a massive sledgehammer to crack a nut". If, as the Prime Minister claimed, donations are being made to bogus charities, there are mechanisms to identify and close them down through the Office of the Scottish Charity Regulator or the Charity Commission in England. It is significant that the Government has yet to provide examples and the Charity Commission says it has not been contacted by the Treasury on this issue.

The risk of a severe reduction in donations is real. As we report today, Willie Haughey, the Glasgow entrepreneur, whose City Charitable Trust donates around £1 million a year, says that in future he will give up to the threshold but "not a penny more". Some philanthropists might simply decamp to tax havens. As a spokesman for Sir Tom Hunter told The Herald, "we could all move to Monaco".

If David Cameron is serious about the Big Society, his Government must protect UK charities from this tax on philanthropy.