Church justifies tax exemption "windfall"

Australian Catholic Bishops' Conference secretary Brian Lucas has defended tax exemptions to churches following the publication of a new study that found churches and other non-profit organisations save more than $1 billion annually by paying less tax or none.

The Age reports that the research by Victoria University's Graduate School of Business for the Rationalist Society of Australia - a group that advocates science over religion - shows that churches are often exempted from a range of federal, state and council taxes, duties and charges.

Critics of exemptions for churches claim taxpayers are subsidising church and charity-run commercial operations, which sometimes use tax advantages to undercut commercial rivals. They say this is unfair competition and distorts markets.

The churches argue that the money goes on welfare, health and education services that would be much more expensive for the community to replace.

Australian Catholic Bishops' Conference secretary Brian Lucas (pictured) said that the church used money saved on tax for welfare.

"That's why the government is happy to give the exemption," he said. "It knows charitable organisations can spend the money more cost-effectively than the government does."

But he said the church was strictly accountable to the government "to the last dollar" for money it received for health, education and welfare. Money donated to the church was not deductible, and parishioners paid tax on it before they gave it.

The business manager of the Catholic archdiocese of Melbourne, Ted Exell, denied that the church escaped tax on commercial operations. "The church has enjoyed a raft of exemptions from time immemorial and in return has put huge amounts back into the community," he said.

According to Myles McGregor-Lowndes, of Queensland University of Technology's Centre of Philanthropy and Non-Profit Studies, taxes that the churches don't pay are irrelevant.

"The argument is that the churches have never been part of Australia's tax system. So measuring income forgone from the churches is as silly as measuring the pocket money parents give children and calling that tax forgone," he said.

If churches had to pay income tax they would simply organise their affairs as business does so that they had no taxable profits. The result would be inordinate costs to the Tax Office and charities but no more tax at all.

He said the Productivity Commission denied that exemptions distorted markets.

Professor McGregor-Lowndes said Australia's problem was that it had no charity regulator as the United States, Britain and New Zealand did. In the US or UK, the public could see the tax return of every charity, going back years, but Australia did not even have a specific accounting standard.

"It's a bit of a mess, quite frankly, and that's why people are sensitive. They want to see what's being done with what they think should be public money.

"But charities exist on trust, and most would like a regulator that could give them that seal of good housekeeping."

Churches reap the benefits of belief: $500 million in tax exemptions (The Age 29/4/06)

LINKS (not necessarily endorsed by Church Resources)
Catholic GST Religious Group

ACBC acts to ease GST confusion (CathNEws 7/10/05)


1 May 2006