Churches aren’t business and they still deserve a tax break

Natasha Moore explains why tax exemptions for religious organisations still make sense.

Religion and money have surely made, at times, for an unsavoury mix.   So in an age when government and public space is self-consciously secular, do tax breaks for churches and other faith-based organisations still make any sense?

The suggestion that we could solve our ever-chronic budget problems by lifting tax exemptions for religious organisations pops up in the media about every six months, like clockwork, and doesn’t it sound grand – a clear-cut route to prosperity and rationality for all.

Sadly, like most deceptively simple solutions to complex problems, there are about 1200 reasons why it won’t fly. And that the government either hasn’t thought of it or is in a conspiracy to protect the churches isn’t one of them.

The major reason why churches are not taxed like businesses is because, actually, they aren’t businesses. Their activities lie largely outside the taxable economy. There are plenty of organisations (like sporting clubs, historical societies, conservation groups, art galleries) and plenty of transactions involving money (inheritance, gifts, lottery wins, children’s pocket money) that we don’t tax. These aren’t “special privileges”. They’re just interactions between people that the government neither deserves nor expects a cut from.

Cultural or other community organisations may or may not be wealthy, but a museum’s large endowment or a religious denomination’s property holdings don’t change the purpose for which they exist. You may not like religion very much; you may not like art, for that matter, or bingo or dragon-boating. Yet the goals of both the University of Sydney and the Uniting Church – the goals of the local bridge club and the local synagogue – are fundamentally distinct from those of corporations.

Tax law isn’t a popularity contest: whether people are coming together and pooling some of their (already taxed, mind you) income in order to run a kids’ soccer tournament or a worship service, you either need to tax all community organisations or none.

And, in fact, religious organisations do pay tax where appropriate. Depending on what sub-category they fall into, they pay fringe benefits tax, payroll tax, land tax, rates and other local government charges, stamp duty, and so on. In NSW, they qualify for land tax concessions; in Victoria, they don’t. If you give to the Salvos’ Red Shield Appeal, your donation is tax deductible; if you give to the local church you attend, that’s not.

I asked one of Australia’s leading experts on charity law, Anne Robinson, what would happen if the government did simply revoke tax concessions for churches and start taxing them like corporations. Would it matter that much?

“The church has no entitlement to special treatment under tax law,” she said.

“It is also true to say that if the church closed up shop and didn’t provide the schools, the hospitals, the social welfare infrastructure – society would go bankrupt, basically. It would cause the kind of social disruption that would bring governments down. They could not fund these social goods without the contribution of the church.”

88% of non-churchgoers in Australia like the idea of having a church in their neighbourhood.

The last time somebody did the maths (about a decade ago), 23 of the 25 largest charities in Australia were faith-based. A 2010 government report on the contribution of not-for-profits found that the sector has nearly 5 million volunteers contributing $14.6 billion in unpaid work; that faith-based charities are by far the largest category of NFPs; and that they have a significantly higher ratio of volunteers to employees even than other charities.

The tax code as it stands represents rational self-interest on the part of governments – which in this case, at least, also means rational common interest.

As critics rightly point out, the church has at times done harm to those in its care; most obviously and most heinously in the sexual abuse of children in recent decades. Those involved should continue to be held to account – via the courts. The tax code, though, isn’t meant as an instrument for punishment.

The fact is, in spite of its manifold failures, the research increasingly shows that church attendance has positive effects: for mental and even physical health, for longevity, for social cohesion.

It seems like most people, actually, recognise this on some level. Social researcher Hugh Mackay has written that 88 per cent of non-churchgoers in Australia like the idea of having a church in their neighbourhood. In spite of everything, there’s still a widespread presumption of public benefit.

The tax law relating to religious organisations, as it stands, is considered, up-to-date, and fair. Churches don’t receive special treatment, and shouldn’t. The evidence abundantly suggests that they do contribute to the public good.

Maybe religious people are misguided and wrongheaded; maybe what they believe is false. But we don’t tax people for their world views. Be careful what you wish for.

Natasha Moore is a Research Fellow with the Centre for Public Christianity. 

This article first appeared in The Sydney Morning Herald.


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