Avoiding tax – supernaturally

Jokes about money, tax, death and religion are common. For example – we often say “you can’t take it with you!” Well some of my workmates used to say – perhaps there is a way. After all our colleague, who is a very smart cookie and also a devout evangelical Christian, started intensively studying financial theory in his retirement.   We used to joke that perhaps he know something we didn’t.

And they say there are only two certain things in life – death and taxes. But Max Wallace, author of the book The Purple Economy asserts: “The religious tail is wagging the dog of the body politic. The religious believe they can avoid death. They know they can avoid tax!”

This is certainly true in New Zealand – and it’s all tied up with the definition of “charity” for purposes of tax exemption. Here’s how the NZ Charities Commission defines it:

What is a “charitable purpose”?

“Section 5(1) of the Charities Act 2005 says that “charitable purpose”

“. . . includes every charitable purpose, whether it relates to the relief of poverty, the advancement of education or religion, or any other matter beneficial to the community.”

The law surrounding charitable purposes is 400 years old. It has been developed over time mainly by judges’ decisions in court cases.

“Charitable purpose” has a special meaning in law. It may include some purposes the public would not consider to be charitable and it may exclude other purposes the public would consider to be charitable.”

I can understand “relief of poverty,” “advancement of education” and “other matters beneficial to the community.” But, surely “advancement of religion” is one purpose  that “the public would not consider to be charitable.”

The charities commission makes clear that “advancement of religion” has a specific meaning and does not include that which we normal consider as charitable work:

“To be charitable under this category, your organisation’s purpose must:

  • be for the benefit of a religion; and
  • aim to pass on the relevant religious faith to others.

The term “religion” includes many different faiths and belief systems (for example, Christianity, Judaism, Islam, Hinduism, and Buddhism). Generally, however, to be religious there needs to be:

  • a belief in a supernatural being, thing, or principle
  • an acceptance of conduct in order to give effect to that belief.

To “advance” religion, the faith must be passed on to others by spreading its message and taking positive steps to sustain and increase the religious belief.”

Exemption from local body rates too

Oh, by the way. This religion exemption also applies to local body rates. This from the Local Government (Rating) Act 2002:

“Non-rateable includes
Land used solely or principally-

(a) as a place of religious worship:

(b) for a Sunday or Sabbath school or other form of religious education and not used for private pecuniary profit.”

And

Land owned or used by, and for the purposes of, an institution for the instruction and training of students in theology and associated subjects, being land that does not exceed 1.5 hectares for any 1 institution.”

So, in a country where our human rights legislation guarantees freedom of religion and belief, implying a level playing field for all, we have tax and local body rating laws which provide financial  privileges to supernatural beliefs, their practice and advancement.

And that privilege means a compulsory tithe on all tax paying citizens to subsidise the supernatural worship and prosletysing of one section of the community.

The cost of religious subsidy

This is difficult to establish. Firstly, the supernatural charities have tended to be very lax with making returns and/or publicising their income and what it is used for.  And to be fair, we should attempt to differentiate between that income that goes towards genuine charity and that which goes toward supernatural worship and prosletysing. That task will require better financial returns and auditing.

However Sally Blundell, in a 2008 Listener article (The God Dividend) gives some estimates:

“Statistics New Zealand’s 2004 income and expenditure figures for not-for-profit institutions show religious charities – about 10 percent of the estimated 97,000 not-for-profit groups in this country – received $534 million in donations. Such groups, the report says, “also have substantial investment income”.

And:

“A 2000 inquiry by the city of Melbourne concluded that its property rates were 10 percent higher than they needed to be because of non-rateable church property”

On this basis Max Wallace has estimated that this compulsory tithe costs the New Zealand taxpayer several hundred million dollars a year, probably more (don’t forget the “substantial investment income”). The cost to the Australian taxpayer has been estimated at $31 billion (see Max Wallace,  Clericalism in New Zealand, A conspiracy of Silence in Realising Secularism).

But Churches do charitable work

Yes they do, or at least some of them do. And good on them – I personally have donated towards such work. However, it is hard to separate that genuinely charitable work (and the income that goes toward it) from the sectarian supernatural worship and prosletysing (and the income that goes toward it).

If the privileged supernatural exemption was deleted this would not change genuine charitable work one iota – surely. And the Churches would them be in a more morally acceptable position.

Excuses, excuses …

Most human rights questions are also ethical questions. So I would expect that people who adhere to an “objective moral” outlook would be able to see the problem. I would have expected that churchgoers, despite their pecuniary interest (they can claim tax exemption on their donations) would be able to see this situation is wrong. And some believers I have spoken to don’t disappoint me.

But there are others whose moral outlook is determined more by their wallet than their head or moral intuitions. They will squirm and wriggle to justify this special religious privilege. They will misrepresent the legal situation. Make all sorts of unsubstantiated claims about the charitable work their churches do and do everything to deny the fact that this priveliged taxation exemption amounts to a subsidy for them. A compulsory tithe on the rest of the community.

All their theological jelly wrestling skills will be used.

Have a look at some of the recent discussion of this issue at two conservative Christian blogs MandM (Guest Post: Does Tax Exemption for Churches Directly Cost Taxpayers?) and True Paradigm (Does tax exemption for churches directly cost taxpayers?)*

Here are some excuses I have heard:

Atheists can also claim charitable tax exemption. It’s a theological position sop should come under the religion clause. The NZ Humanists have registered a charitable trust: Of course other organisations like the Humanists can register charitable trusts. The NZ humanists registered under the Education / training / research sector. They cannot register under the Religious activities sector – because they don’t adhere to supernatural beliefs. A characteristic of religious organisations registering under the religious activities sector is that they include a section in their rules on their beliefs. This would be required to satisfy the demands of registration.

Churches make little surplus money: The old poverty stricken church mantra. And it may be true in some cases – we don’t know until we can open the books. Sally Blundell reported that in 2007 the  “Melanesian Mission Trust, with a property portfolio in Auckland’s prime eastern suburbs valued at $212 million, was granted special tax-exempt status.” Some Churches are obviously very rich and have large property investments.

Tax exemption is not a direct cost, it is a refusal to tax: Pull the other one. If religious organisations avoid paying their share of social costs it means that honest taxpayers must pay extra. We are subsidising those organisations.

There are plenty of charities in New Zealand that are involved in scientific research. Schools can be charities. Neither is tax exemption restricted to charities: some sports groups have tax exemption and some of them can also request charity status: Yes – of course. And most of us a happy about that. (I personally wish the government had not canceled tax exemption to companies for research and development costs).  And surely Churches can register for tax exemption under similar sectors. But why should they have the special privilege of exemptions for supernatural worship and prosletysing. That is unfair.

Individuals who are paid by the charity pay their own tax at the normal rates: True, but there are plenty of examples where wages are fiddled, free accommodation and cars are provided, etc., to take advantage of the religious tax exemption.

The amount of food, counseling, shelter given to people in- and outside the church is enormous. It would easily dwarf any savings they make from not having to pay their contribution to say policing, and probably decreases policing costs indirectly: Maybe true in some cases. But surely that sort of work would come under the normal charity sector and would not be at all disadvantaged by removing the supernatural religion privilege.

Churches don’t use many social services and therefore should not have to pay towards them. The government taxes too much, I think they should decrease taxes to all people in NZ. My tax dollars go to the health system which is used disproportionately by people who drink to excess. Why should a disproportionate amount of my tax go to supporting an activity in which I don’t engage?: Of course these arguments get used by anybody moaning about taxation. They are irrelevant to the question of the supernatural privilege.

You are opposing freedom of religion. Advancing secularism is aimed at destroying Christianity. Your complaint about taxation is unfair and has the aim of undermining religion: Well, my personal religious views are surely irrelevant. As I said some believers can also see the immorality of the supernatural religion tax exemption. You must have very little faith in the viability of your ideas if you think they need such a privilege to survive.

And it is a human rights issue. Isn’t it?

UPDATE: Now find I am being attacked on this issue by another conservative Christian blog (see Are churches charities?). That makes three! Obviously a sensitive issue.

UPDATE 2: Some sort of competition going on. Another conservative Christian blog has come out attacking my comments (see What to do when you can’t win). Brings the current total to 4! As I said. obviously a sensitive issue with some people.

I am looking forward to the first liberal Christian blog willing to come out in support the fairness on this one.

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29 responses to “Avoiding tax – supernaturally

  1. I can only admire your unparalleled trolling skillz. I bow before the master.

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  2. Ropata – please explain. I can’t see what you mean.

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  3. I think you like stirring things up! It’s a lively debate

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  4. Would you rather I remain silent when I see an injustice?

    I know the usual religionist tactic is to remain quite about this particular dirty little secret. And don’t forget this post is a response to two on conservative Christian blogs which have specifically attacked my comments on this issue.

    Did you accuse them of “trolling”?

    This “stirrer” term is always loaded with the prejudices of the user.

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  5. And now a smear as well. Nice work with the overblown rhetoric, but your inquisition is misguided sir.

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  6. Ropata, I can appreciate you have a financial interest in this issue. But why be silly about it. Debate the facts or keep quiet and hope it goes away.

    I, myself, don’t do inquisitions. But I notice that the year this tax privilige goes back to was the same that the Catholic Roman Inquisition burned Bruno at the stake for heresy.

    You guys, thankfully, don’t have the same power now. But it seems you have the same tax privilige. Sent from my iPod

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  7. Ken this issue is just another of the many hypocritical injustice foisted on the community by religion and big money interests.
    I am told the fabled Jesus was asked about paying tax and the reply was to the effect that who’s head was on the coin.
    Give unto Ceasar what is Ceasar’s.
    In other words pay your taxes.

    The place of privilege won with the use of fear and superstition is out moded. Many established churches have disproportionate wealth to their service given.

    Ropata it is not stirring to set a wrong right. When a minister or church officer starts to defend the tax exemption then he will need some logic and substance to his case. not expect others to roll over in fear and respect.

    Talk sense man if that is possible. You may well believe your right is “God Given” in which case you probably think you are above other members of society in a privileged dream world.

    This matter of tax privilege need to come to earth.

    The tentative respect given to religion is sadly abused by churches.

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  8. Take the Christian god out of the picture.
    Is it ok for, say, a false religion to claim tax exemption?

    A false religion.
    Complete with a real golden calf as an idol, for example.

    As in a fake god where the shaman/guru/cult leader have clearly lied to their bretheren to fleece them silly.
    Scientologists for example.

    Should they be made to pay their taxes or should they continue to rake in the cash scott-free because they claim religious status?

    I can understand a Christian getting all defensive and protective of their own “true” god but why should they protect the tax haven status of the false gods when…y’know…they’re false.

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  9. It may not be co-incidental that church groups have been notable in backing election of National.

    The spare money gained from limited taxation is then applied into the political arena.
    Hardly application to the needy in society.
    Unscrupulous fraud!

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  10. Part of the role of the church is to support and help the community. It would be interesting if you took away the religious activities sector you would see what churches are really doing in this respect.

    Personally I would continue the ‘religious activities’ and social support regardless of tax breaks. It helps that they are in place but anyone worth anything will be happy doing what they believe without them.

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  11. Ben, does it not worry you that the “religious activities” sector provides a privilege to only one section of the community? This has been tested in court – hence the supernatural ruling.

    The privilege is why I say its a human rights issue.

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  12. I would worry me more if it was the only financial subsidy that was happening.
    Even in the charter(under other sectors) there are groups that receive charitable status that have such a small target group. Hauraki Fishing Club for example.
    I realize that the religious activities is the broad category and I am going details here but if it is a human rights issue then why are you not calling into question the other groups who receive tax breaks that have such a smaller target group that the religious activities one?

    There are many other financial subsidies around the place that would be human rights issues if we looked at them in the context of this argument. Why should people who are of Maori decent who want to be come teachers receive a grant easier than those who are not. A very small group to be giving privilege to.

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  13. Ah – found it. The Hauraki Fishing Group. It comes under the sector:

    (Iwi development) Education / training / research Environment / conservation Marae on reservation land Community development Employment Arts / culture / heritage Economic development

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  14. Excellent post. I find myself becoming more and more appalled at the inordinate power and financial advantage given to certain groups of people in the name of religion.

    I cannot think of a single rational, logical argument for religions’ tax exempt status. And honestly, I am trying – for the sake of argument.

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  15. Bugger, lost my previous comment.

    Was just pointing out that the Hauraki Fishing Club was not registering under a privilege. However, Iwi development may well be another privilege for one section of the community.

    You also raise privileges for people of Maori descent. You may have a point. It is probably in conflict with the essence of our human rights legislation but an argument for privilege can be made for previously disadvantaged groups (eg women). I can accept that but it is a slippery slope we should really try to get away from.

    However religious privilege is an anachronism that goes back to a time when church burned people at the stake. We have a different outlook now.

    While my opponents have presented a stereotype of churches on the bones of their arse doing fantastic social work (which may be true in some cases) we know that some of them are extremely rich, have huge property and other investments. Together with the utter arrogance shown lately by churches guilty of sexual and other abuse of children, and covering up these crimes. And the continual preaching to us about morality when they are so discredited.

    I think the person in the street is just not aware of the religious privilege, thinking that the tax exemption is for genuine charitable work. Most people might actually feel quite angry of they knew.

    If the religious privilege was removed it would not stop genuine charity work. But it might make possible the eventual claw back of this subsidy to the undeserving that has been going on so long.

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  16. Tsuken – you want some arguments jsutifying the privilege? OK they are not rational (after all money is involved) but have a look at Guest Post: Does Tax Exemption for Churches Directly Cost Taxpayers?.

    The issue does motivate some people.

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  17. Ken, are you personally attacking the author of the post that you disagree with? because when I didn’t even name you, but explained my disagreement with your view on this very issue (http://www.beretta-online.com/wordpress/index.php/are-churches-charities/), you came along, provided a link to your blog, and accused me of personally attacking you.

    Anyway – all you’re actually doing is declaring that advancing religion doesn’t in itself benefit people, and then demanding that the governemnt adopt this stance in its approach to charities.

    We don’t have an atheist state.

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  18. Boy, your thinking is muddled.

    It would have been polite to name me and provide a link. It is a public discussion, after all, and I have nothing to hide.

    No I am not demanding the government say anything about religion, or its advancement. I am not asking for a judgement.

    All I am doing is pointing out that the existence of this privilege is in conflict with the essence of our human rights legislation which guarantees freedom from discrimination on the basis of religion or belief.

    I am asking the government to remove that privilege.

    Governments don’t have brains. They can’t adopt an attitude or stance. But they can pass and repeal laws.

    I think this muddled thinking comes from your own pecuniary interest. You have something financial to loose and it is only natural you will do your best to defend that privilege.

    I don’t expect any better.

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  19. Pingback: What to do when you can’t win « Something should go here, maybe later.

  20. Ken, unlike you, when I discuss the issue I provide clear, well explained reasons for my claims. I have provided clear, well explained reasons for saying that you are, in fact, requiring the government to take a stance on religion by making laws a certainw ay.

    Just flatly denying this is not a serious response.

    I had no need to name you (which would in effect have shamed you), and in fact I did provide a link to the place where you made your arguments to which I responded. I’m not obligated to chase down every instance where you bring the issue up and serve as your promoter.

    And as for my pecuniary gain – what on earth are you smoking? What exactly am I gaining here? What does anyone gain by supporting a church that they wouldn’t gain by supporting any other charity?

    Ken, seriously, just think before attacking sometimes.

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  21. Glenn – I use the word pecuniary in a mild form as related to money. Just to point out that some people are approaching this question becuase money is involved – not necessarily directly to them, at this moment, etc.

    For example. Take the attitude towards the recent increase in tobacco tax. The people selling fags are noticeably upset. They don’t talk about money – instead arguments like this will encourage criminals to illegally import fags etc.

    My own reaction to the suggestion of a big increase in alcohol tax. I spontaneously reacted against it because I enjoy wine. I have a pecuniary interest which is perhaps inhibiting my ability to consider the greater good.

    Similarly when the government remove tax exemption for company investment in research and development. My pecuniary interest led me to think this was bad. No, I am no longer in the market for research contracts – but I have been in the past and reacted on that basis. This had more effect on my reaction than arguments of the general good.

    These sorts of subjective reactions from interested parties are inevitable whenever things like taxation are discussed.

    I notice, however, that some people can get beyond there initial and direct response to consider the greater good. In this case they can see the religion tax exemption as contradicting the essence of our human rights legislation prohibiting discrimination on the basis of religion and belief.

    I actually admire people who do this because I see it as an example of true moral logic. Of people being rational rather than rationalising. Of deriving a moral position from the facts of the situation rather than trying to twist the facts to fit a preconceived position.

    As for clarity – I suggest we let others be the judge of that.

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  22. Thanks for the link, but I think you’ll regret doing it since my post is not about the topic but your inability to argue straight on it.

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  23. The Internet: Where religions come to die

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  24. Scrubone – providing a link is only courteous and surely encourages rational discussion. Hiding sources of information doesn’t.

    If there are faults in my arguments, or discussion style, I am always willing to know of them and clearly I will apologise when I realise I am wrong.

    But I am also aware that we all have a tendency to obfuscate and cloud issues, or divert discussion, when we are unsure of the validity of our position.

    I think there is a lot of that going on at the moment over this question of religious privilege.

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  25. Richard Christie

    Pat provides a clue as to how some of the tax exemption is used:

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  26. Well Ken, perhaps you have an instinct to analyse things in terms of what you perceive as your own pecuniary interest (as you’ve basically said).

    I try hard not to do so, and I am not aware of anything I have to gain from the tax exempt status of churches. Your suggestion about “Your [i.e.my] own pecuniary interest” was simply a left field remark.

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  27. Whatever, Glenn. I am not interested in silly wrangling.

    I have put a proposition on the table and I think people should identify where they stand on it.

    So far, I and Scrubone agree that the act should be included by adding other beliefs and life stance. You have indicated you cannot support that.

    So what about Matt, Betyada and Ropata? How do you stand with proposed amendments.

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  28. “You have indicated you cannot support that.”

    As I pointed out on the halfdone blog where you said this, this isn’t true. I said it’s not needed, since the law is already inclusive of other beliefs and life stances. It lists the advancement of religion, the advancement of education and the relief of poverty as examples, but explicitly adds “or any other matter” of societal benefit.

    Your beef is not with the legislation. It is with the Charities Comission.

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  29. Actually, all this is old hat, Glenn, because the issue has been raised with the charities commission and the human rights commission.

    The later acknowledge there is an anomaly with human rights legislation but they were unprepared to take it up. This is because the issue had already been tested in the courts. And it was that outcome the Charities Commission uses to define its specific religion category. They describe this on their website and any applicant must provide some sort of information of supernatural belief and their work to advance it.

    The Human rights Commissions advice is that a court case would not be successful (and therefore they would not help pursue one) and that the applicants should instead work for an amendment to the legislation.

    The fact is that applicants must register under one of four categories, one of them being religion (the others education, poverty relief and “other benefits”).

    I have floated the idea of an amendment to the legislation as follows:

    The government should be asked to amend the taxation law to remove a religion privilege (perceived or real) by either:

    1: Removing the advancement of religion as one of the sectors the application could be made under.

    Or

    2: Amend the “advancement of religion” to instead state “advancement of life stance” or “advancement of religious or other beliefs and life stance”

    or something to that effect

    After some discussion Scrubone accepted it (I think option 2).

    You appeared to reject it but now your position is unclear.

    It’s pretty simple to give a clear answer on this, isn’t it ?

    Remember we live in a pluralist society – you might argue the language is already inclusive – others don’t. I see my options as a way of covering both views. Even if you continue to say the current language is inclusive you are still able to support an amendment which convince others that it really is.

    Ropata seems to be waffling about it and hasn’t made a clear commitment. Matt is just ignoring it at the moment. Bethyada has not responded either.

    After all the debate and indignation (4 conservative Christian blogs getting stuck into me over a comment on someone else’s blog – not even a post here) I would have thought people would have responded much more quickly. After all, a No is acceptable. One doesn’t have to be ashamed of a clear position.

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