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We would all win if churches - and atheism - were taxed

On 21 March 2014 the Managing Director of the Australian Christian Lobby, Lyle Shelton, posted ‘We would all lose if churches were taxed’ in On Line Opinion.

As the title from this response implies, the way Lyle framed this issue missed the point about the desirability of government taxing, not just the churches, but atheist and other alternatives to religion, as well.

In my book, The Purple Economy, published in December 2007, I made it clear that was my position. I also detailed my opposition to the non-taxation of atheism in On Line Opinion  on 12 November 2012.

On 8 August 2013 Robert Nola and I published this  Max Wallace & Robert Nola: Asset rich churches should pay fair tax ...

 in the New Zealand Herald. We recycled my argument that the exemption from taxation for religion is an inappropriate ancient privilege dating from the 1601 Statute of Charitable Uses.

It can be easily distinguished from the other four main ‘heads’ of charity: the relief of poverty, the advancement of education and other purposes beneficial to the community. We argued it should be a simple matter to amend charity and tax law by simply deleting ‘the advancement of religion’ as a head of charity to the benefit of all.

The privileges that alternatives to religion enjoy may be more complex to remove, requiring legislation that overrides the common law decisions that have brought non-religious organisations into the tax-exempt net.

The purpose of these kinds of reforms is twofold: firstly, to recover the substantial annual revenue that goes missing because of the religious exemptions especially, roughly calculated by Perkins & Gomez  to be annually $31B in gross terms. These are crude estimates because detailed information is not available.

In the US, associate professor Ryan Cragun and his associates were better able to calculate the annual loss to revenue at $71B US Loses Over $71 Billion in Religious Tax ... - Center for Inquiry

I believe the main reason the Australian figure is so high is that Australia funds religious schools while the US federal government does not.

What citizens believe is no business of government. When governments subsidise belief on the ancient justification that these beliefs are a public benefit, they are locking themselves into the worldview of the 1601 Statute where it was assumed Her Majesty’s (Elizabeth I’s) subjects were religious by definition. Government was then a theocracy with no separation of church and state. We now live in democracy, admittedly with no true constitutional separation, as discussed below, but we are at least aware of the principle.

So, there are two main objections to government subsidising belief (1) it is no business of truly secular government and (2) the substantial revenues that would flow back to government at federal, state and local government levels would be a significant benefit for governments in addressing all the expenditure commitments they have to all citizens, be they religious or secular.

Lyle Shelton’s argument misses all of the above. He employs the usual line of defence that Christian churches do good works therefore the religious exemptions can be justified.

Many years ago, the former editor of the Australian Financial Review and Quadrant magazine, the late Paddy McGuinness, pointed out that when religious people do good works, which is mostly welcome, it is voluntary, and as such, it is misleading to reconcile the value of that work to its commercial value.

The truly charitable arms of religious organisations are usually incorporated as separate non-profit entities. Be they religious or secular, so long as their activities are open and transparent, and they do not function as sinecures for their administrations, these charitable activities are welcome.

Lyle Shelton claims ‘there is no systemic evidence of abuse of funds by the non-profit sector’. Really? Here’s some food for thought: on Radio New Zealand on 16 June 2013 Dr Michael Gousmett, a former CEO of a Catholic charity in Christchurch, with a PhD on the history of charity law, and a qualified accountant, described how the Sanitarium organisation in New Zealand paid $10M to its parent organisation, the Seventh Day Adventist Church in 2012.  This was more than the $3M the church paid to its Pacific island charities or the $4M given for elder care in Auckland. He had earlier detailed his concerns elsewhere Please give carefully - National - NZ Herald News

Michael Gousmett noted that between 2003 and 2013 the church had added only 600 new members for a total of less than 12,000 people. When he wrote to the church and asked what happened to the $10M, they did not reply. So less than 12,000 members of a church had $10M dollars to spend. Does Sanitarium make such a generous grant to its parent church every year? Where does this ‘religion as public benefit’ money go exactly? If there isn’t a problem, why won’t they answer Michael Gousmett’s question?

There are two more points here. Not all religious organisations engage in good works. Since religion is by law a form of charity itself, they are under no obligation to do so. Of those that do, not all spend as much as they could. As noted in our article cited above, NZARH research found that some religious organisations in New Zealand have very significant sums sitting in the bank, more than they require for recurrent expenses.

Why? What happened to the Christian principle of giving? Especially when research has shown a quarter of New Zealand children are living in poverty.  If the reader asks is why the New Zealand examples here, the answer is that the Australian  Charities and Not-For-Profits Commission, unlike its New Zealand counterpart, does not have a wealth reporting requirement for Australian religious organisations.

It was curiously omitted, a fact noted by the Not-For-Profit section of the Law School of the University of Melbourne, when the ACNC was established. Despite this omission, the Abbott Government is seeking to abolish the Commission, seemingly at the request of the Catholic Church Church lobby in win over charities watchdog - Sydney Morning Herald

In evidence to the Economics Legislation Committee of the federal parliament on 17 November 1999, the doyen of charity law in Australia, and a defender of  religion as a form of charity, Professor McGregor-Lowndes, said the structure of the Australian Catholic Church was an ‘absolute mystery’ and that it would take a ‘life’s work’ to understand it.

So, apart from what little information there is on the public record, we really don’t know much about the wealth, revenues and expenditures of religious organisations in Australia. I have argued elsewhere it is quite possible the Catholic Church is wealthy enough to pay for all its schools effectively making the $5B+ per annum that Gonski recommended government should find for public schools unnecessary. See

That is a motive, I suggested, for the Catholic Church to want to conceal its wealth. I also made the point that, if the church was prepared to systematically conceal the behaviour of its child abusing priests, as the current Royal Commission is now discovering, could you trust them to tell the truth about their finances?

Lyle argues that if churches were taxed ‘the church would be funding the state, which would arguable be a breach of our constitutional separation of church and state’. Firstly, as I have argued in On Line Opinion  25 September 2008 and 4 October 2010  there is no true constitutional separation of church and state in the constitutional monarchy that is Australia.

That is especially the case at a state level, where no legal action could be brought to argue the NSW government’s $100M+ funding of the Pope’s World Youth Day in 2008 was unconstitutional because there is no section in the NSW Constitution separating church and state. That is true for all other Australian state constitutions.

Second, there is no reason, apart from a theocratic one, to assert that religion should be given special status in a democracy. All organisations, be they religious, atheist or secular, should be treated equally for tax purposes. Equal treatment is supposed to be a feature of democracy.

Lyle concludes that the argument that churches should be taxed is driven by a small minority who have a distaste for Christianity. On the evening of Sunday the 12th of July this year, the Reverend Bill Crews of the Uniting Church, on his regular program on Radio 2GB, said he believed churches should be taxed. Bill Crews runs the Exodus Foundation, which feeds Sydney’s down-and-out citizens daily. Unlike many religious, he is at the coal face doing good works. His comment infers he understands the distinction between religion as a stand-alone form of charity and true charitable works.

Further back in time, in 1975, the Social Responsibilities Commission of the Anglican Church said in its report entitled ‘The Politics of Living’ that ‘an attempt to argue that the church, because it is the church, has some inherent, superior right to privilege is bound to backfire as it becomes clearer that Australia is and must be a secular society.’ The Report urged a complete study of ‘the whole question of privileges extended to the church and all other special interest groups.’ (‘Church hit over its privileges’ The Age 11 November, 1975) This Report has disappeared without a trace.

Max Wallace
On Line Opinion, posted Friday, 18 July 2014

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