Defence of religious tax free status flawed

Natasha Moore's recent defense of the tax exemption for religion ('Churches aren't businesses and they still deserve a tax break'), published in the Sydney Morning Herald on 10 October 2016 is instructive. It is quite a contrast to Brian Morris' Daily Telegraph article of 8 May 2016 which detailed an IPSOS survey that found 64 per cent of Australians favour churches being taxed (It's time for churches to start paying tax').

Ms Moore's piece assembles briefly, in the one place, the usual back and fill defenses for the continuation of the centuries old tax privileges for religion.

Her defenses came be critically summarized as follows:

1. Argument by omission and misrepresentation
2. False analogy
3. Selective use of minor detail to draw attention away from major facts
4. A fear factor
5. Appeal to a higher purpose
6. Outright denial

I shall briefly analyse Ms Moore's six arguments in this order in which they appeared. They are not all distinct. Some are woven together as required to make her case.

Argument by omission and misrepresentation: Ms Moore's major omission is that she fails to distinguish between the genuinely charitable activities of religious organizations such as schools, hospitals and the various relief-of-poverty institutions religions maintain (which can entail attempts at indoctrination and/or recruitment of citizens who use those services) and the activity of religion itself.

It is the number one tactic of religious defenders of the tax exemptions for religion to muddy the waters between 'the advancement of religion', the four hundred year old law that religion itself is a charitable activity, and

religious organizations' various charitable institutions mentioned above.

Purely religious activity usually occurs in a place of worship by an organization that has as its purpose the conversion of citizens to its belief system. It usually relies on a sacred text, figures of authority who explain that text, rituals that are held to be necessary to express faith in a belief.

None of that need involve any activity outside a church/mosque/temple. The Pope himself once defined religion as 'supernatural charity.' The idea is that a supernatural being's delivery of 'his' message through his representatives on earth is a form of benevolent charity. You get the message, you convert, you are saved for the afterlife. That covers most, but not all, religious activity. Since 1601 'advancing religion' itself has been considered by law to be a tax-exempt charitable activity.

Members of a church need not do any work outside a church, in any other organisations, to qualify for tax-exempt status. Churches can tithe their members (10 per cent or more), invest the money in passive financial products such as bank accounts, bonds and shares, or get involved in active commercial businesses unrelated to religion, and all their income will be tax-exempt.

It is normal for the defenders of the tax exemption for religion to omit these facts, as does Ms Moore, just as she omitted any mention of the IPSOS survey cited above.

The various institutions such as schools, hospitals, relief-of-poverty institutions are considered at law to be charitable irrespective of whether they are run by religious or secular organisations. To fail to distinguish between the advancement of religion itself and these other institutional activities is misleading.

False analogy: Ms Moore argues that institutions like the University of Sydney and the Uniting Church are 'fundamentally distinct from [for-profit] corporations' and therefore should not pay tax. But Ms Moore is setting up a straw man here and not comparing like with like.

The issue is that the University of Sydney is a secular organization. The Uniting Church is a religious one. Australia is in principle a democracy not a theocracy.

There is supposed to be a constitutional separation of church and state. If the state funds the University of Sydney that is a secular activity. It the state funds a religious organization, in principle, that should be unconstitutional on the grounds of separation of church and state.

The fact that there is no effective constitutional separation in the constitutional monarchy that is Australia is little understood and rarely discussed in mainstream media, including by Ms Moore.

Selective use of detail: Ms Moore argues that religious organizations do pay tax 'where appropriate'. This includes some fringe benefits tax, payroll tax, land tax, rates stamp duty, local government charges. Yes, it is a moving feast as to what, when and why, some religiously based organizations pay these taxes. But again, she does not say which religious institutions pay these taxes and she completely omits the fact that religious organizations do not pay major taxes like income tax or capital gains tax. She also omits the direct grants church organisations get from government.

As for fringe benefits, she fails to mention the ATO's Interpretive Decision 2001/332 of 15 September 2001 which allowed a religious organization to pay a retired pastor $1,000 per week paid into a church credit card for his personal use on top of the free accommodation and free car use the pastor was already receiving because he was 'religious.'

Fear Factor: Ms Moore argues if government had to provide all the schools, hospitals, services, religious organizations provide society would 'go bankrupt'. This is a variation on the Omission and Misrepresentation argument. No one argues these organizations should be taxed, though funding of religious schools should certainly be considered to be unconstitutional as it is in the United States. Again, the failure to distinguish between the 'advancement of religion' itself, and other charitable activities.

Higher Purpose: Ms Moore next argues studies have shown church attendance has positive effects for mental health, physical health, longevity and social cohesion. Religion is a 'public benefit.' No it isn't. It would be understood as a private benefit if there was a true separation of church and state in Australia. Atheism is a private benefit as well, and like religion, its organization in Australia should not be tax-exempt. Government tax privilege for any belief compromises the idea of Australia as a secular nation i.e. neither for nor against religion or its alternatives.

Ms Moore concludes 'Churches don't receive special treatment'. This is Outright Denial. Of course they do. They don't pay major taxes simply because of a four hundred year old law.

They receive vast sums for their religious schools to the detriment of public schools against the principle of separation of church and state and their various charities receive direct grants which may or may not be appropriate.

They have prayers breakfasts in parliament house; politicians fawn over what they perceive is the Christian vote; voluntary euthanasia in the Northern Territory was killed off at the behest of the Catholic Church etc etc.

The fact that Ms Moore felt the need to defend these privileges is a measure of the growing concern many have for the non-taxation of 'the advancement of religion.' The problem the churches have is that this issue is now out in the open. Sooner or later there will be consequences. In fact, in Greece there already has been.

On 23 April 2010 the financially besieged government of Greece repealed some of the legislation allowing the Greek Orthodox Church to avoid taxes. These included

• A tax on their substantial real estate (being, like the Catholic Church in Australia, the largest land holder)
• A 20 per cent rate of tax on rents they receive from their real estate
• A 3 per cent tax on revenues from edifices and leased lands
• An advance payment of tax on their future likely incomes
• A trivial .5 of one per cent on inheritances and donations
• Some stamp duty fees on property sales

Pity Ms Moore forgot to mention this. She also forgot to mention the Senate enquiry of 2010 where Australian Tax Office officials were quizzed by two Senators on these matters. Here is the Hansard text of part of that enquiry:

Senator Xenophon: ... what quantum, what number of religions would you say are out there whereby, unless they become visible to you from some of their activity, you would not know they existed as such?

Mr Hardy (ATO): [religious organisations] ... do not have to lodge an income tax return. If they have no reason to have a dealing with the tax office in any other capacity then they have no dealing with the tax office.

Senator Xenophon: Do they advise you of their self-assessment [that they are not taxable]?

Mr Hardy (ATO): No. Self-assessment is that. They self-assess.

Senator: Xenophon: In other words, they are left alone. They have self-assessed and you do not have any reason to monitor them whatsoever.

Mr Hardy (ATO): No. The legislation does not provide for that. They are potentially invisible to us as a taxation entity.

There it is in black and white. The ATO has no idea how many religions are self-assessing or indeed how many there are. Every small religion, sect or cult is potentially a license to print money via tax-exemptions on their incomes. As icing on the cake, they alone are exempted from reporting their wealth to the Australian Charities and Not-for-profits Commission.

I conclude that the whole modus operandi of religions is to privatise profits through their tax exemptions and socialise costs.

A saddening illustration of the latter is the federal government's decision to make compensation for the sexual and other abuses of children in church and other organisations voluntary. This flies in the face of recommendation 35(a) of the Royal Commission that 'The institution in which the abuse is alleged or accepted to have occurred should fund the cost of redress.'

One can imagine the amount of lobbying that went on inside the parliament to achieve that financial outcome for the churches. But Ms Moore's take on this, in tax terms, is that the tax-exempt status of religious institutions should not be withdrawn if they have been found to have committed crimes against children: 'The tax code, though, isn't meant as an instrument for punishment.'

That is Ms Moore's opinion. I would have thought that is a matter for parliament to decide, should it ever care to consider it.