Taxpayers' sacrifice to the churches
* Nick Renton
* May 6, 2008
It is quite immoral for taxes to be extracted compulsorily from citizens
to subsidise extensive concessions for religious bodies.
OUR constitution makes it clear Australia is to be a secular society. In
particular, section 116 provides that "The Commonwealth shall not make
any law for establishing any religion or for imposing any religious
observation …"
Yet the spirit — even if not the letter — of that section is breached by
the Commonwealth Government and all state governments in many tax
provisions.
One example is in division 50 of the Income Tax Assessment Act 1997.
This gives non-profit organisations complete income tax exemption
privileges if they fall into one of several specified categories (having
regard to an organisation's sole or main purpose).
Quite understandingly, these categories include charitable, scientific
and public educational institutions. But they also include religious
institutions.
It must be remembered that any tax concessions to some taxpayers are
inevitably at the expense of all other taxpayers. In this connection,
the inclusion of religious institutions is rather disconcerting, as it
always involves cross-subsidisation.
Why, for example, should the adherents of Religion A pay to provide a
benefit for the adherents of Religion B? Even more so, why should
non-believers be made to pay for the churches of believers?
Of course, to the extent that religious organisations carry out genuine
charitable or educational activities, they should be entitled to the
same tax regime as secular non-profit organisations doing similar work —
but purely religious activities should be regarded as quite different.
To make the problem worse, as shown below, some cults have quite
surprisingly received official recognition as "religions".
Furthermore, the annual cost of the tax concessions to churches is
hidden from the community.
The question of whether scientology is a religion was considered by the
High Court of Australia more than 20 years ago in Church of the New
Faith versus Commissioner of Pay-Roll Tax (Vict.) 1983 154 CLR 120. To
the astonishment of many observers, the court held that it was a genuine
religion.
Justices Mason and Brennan say at page 148:
"47. It follows that, whatever be the intentions of Mr Hubbard and
whatever be the motivation of the corporation, the state of the evidence
in this case requires a finding that the general group of adherents have
a religion. The question whether their beliefs, practices and
observances are a religion must, in the state of that evidence, be
answered affirmatively. That answer, according to the conventional basis
adopted by the parties in fighting the case, must lead to a judgement
for the corporation."
Mr Justice Murphy says at page 162:
"48. Conclusion. The applicant has easily discharged the onus of showing
that it is religious. The conclusion that it is a religious institution
entitled to the tax exemption is irresistible.
"49. The Commissioner should not be criticised for attempting to
minimise the number of tax exempt bodies. The crushing burden of
taxation is heavier because of exemptions in favour of religious
institutions, many of which have enormous and increasing wealth."
Religious bodies benefit from tax concessions at all levels of government.
Federal exemptions apply to income tax, fringe benefits tax and the
goods and services tax. State government exemptions cover land tax,
payroll tax, stamp duties and car registration fees. And local
government bodies give exemptions from municipal rates. In addition,
concessions apply to some water and power charges.
The land tax exemptions cover not only church buildings but also
church-owned commercial properties.
Some municipalities in Australia are home to more religious institutions
than others, so the rate subsidies hit some owners and occupiers varies.
The fringe benefits tax exemption creates an undesirable loophole. It
enables eligible employers to pay lower wages (being amounts subject to
income tax in their hands) and to compensate employees by means of
higher fringe benefits (which are then tax-free to employers and
employees).
Section 57 of the Fringe Benefits Tax Assessment Act 1986 gives total
exemption to fringe benefits given to employees who are religious
practitioners. As there is no cap to this in the legislation, some
churches use remuneration packages that consist of nil salary and 100%
fringe benefits.
The use of such a device can also have the undesirable effect of
creating an unwarranted entitlement to social security benefits.
There is no such thing as a free lunch. All cross-subsidisation
naturally results in higher taxes for the rest of the community.
Some churches conduct commercial operations within their tax shelters.
To that extent they enjoy a tax subsidy at ordinary taxpayers' expense.
But, apart from that, lower overheads also allow them to charge lower
prices than commercial competitors, thus giving an unfair trading
advantage.
To illustrate, the Seventh-day Adventist Church runs the Sanitarium
Health Food Company, which makes many popular food products.
Tax concessions that are automatically available are in any case a very
inefficient way to pass wealth from one section of the community to
another.
A system of targeted grants, awarded on the basis of some objective
criteria (including efficiency and accountability) and subject to some
defined overall budget cap, would be much more appropriate.
Australia believes in the separation of church and state. It would thus
be highly desirable to do away with all unfair tax concessions to
religious institutions that are now available.
It is perfectly proper in a democracy for members of a particular faith
to support it out of their own pockets, but it is quite immoral for such
funding to be extracted compulsorily from other citizens.
The new masters in Canberra should use the budget to adjust these
long-standing anomalies.
Nick Renton is an actuary and the author of about 70 books.
http://business.theage.com.au/taxpayers-sacrifice-to-the-churches/20080505-2b50.html?page=2
--
Shalom/Salaam/Pax! Rowland Croucher
http://jmm.aaa.net.au/
(20,000 articles 4000 humor)
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