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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