Feature
The God dividend
by Sally Blundell
Should non-believers pay more tax to help fund the often secretive “charitable” work of religious organisations?
Wallace isn’t a mean-spirited man.
He knows city missions rattle their buckets in the streets to raise funds for poverty relief programmes, he’s aware some clergy live on a shoestring and that parishioners fill their cake stalls on the smell of an oily apron.
What bothers him is that – despite undiminishing poverty and growing secularisation – many churches and religious groups sit on a largely undisclosed stash of property holdings, investment funds and trading revenues as part of a valuable portfolio made all the more valuable by their tax-exempt status as charitable organisations.
“Why should a non-religious taxpayer subsidise these churches to become exponentially richer? It’s a mechanism for proselytisation, a massive shift from public money to religious organisations. True charity work is providing relief from poverty.”
Over a cooling coffee in a Christchurch café, Wallace – director of the Australian National Secular Association – describes the untaxed legacy of gifted lands, donations, bequests, grants and trading revenue that has added considerable wealth to many a church’s financial portfolio.
This largely unassessed prosperity is the subject of Wallace’s recently published book, The Purple Economy: Supernatural charities, tax and the state, an analysis of church wealth protected by ancient legislation and a raft of more recent case law. (He defines the Purple Economy as “the wealth generated by the eternal mass-exemption from taxation of religious organisations, their subsidiaries and their charitable arms”.)
According to Australia’s Business Review Weekly, the 10 largest religious groups in Australia had a staggering $A23.3 billion of revenue in 2005. The Sydney-based Hillsong Community Church (a Pentecostal Christian church affiliated with the Australian branch of the Assemblies of God) is reported to earn, Wallace writes, a cool tax-free $A50 million a year.
In New Zealand, religious groups and churches sit alongside sports groups, heritage societies, environmental groups, schools, hospitals and health support groups as tax-exempt charitable organisations. Among the 25,000 estimated charities that get a direct subsidy from the state by being tax-free are the Wellington City Elim Church Trust, the Combined Cook Islands Seventh Day Adventist group, the Anglican Catholic Church Trust, the Breakthrough Faith Worship Centre, the Jesus Is Lord Church, the New Frontiers Church, the Church of Scientology, the Raetihi Open Brethren Trust and the River of Life Church. They also get an indirect subsidy through rebates given to those who make donations.
For churches and other religious groups, all non-business income is exempt from tax so long as it is not for the pecuniary profit of any individual. Similarly, any business income is exempt so long as the trust, society or institution involved carries out its charitable purposes in New Zealand and no one with any control over the business is able to direct or divert monies derived from that business to their own advantage.
Should the state, on behalf of believers and non-believers alike, support religious proselytisation?
Wallace says no. “Supernatural charities can have their belief systems and proselytise to their hearts’ content. What they should not have is unqualified tax-exempt income to promote these beliefs at the expense of that nominally secular democracy comprising an increasing number of citizens who have no interest in the ideational culture of religions.”
The wealth of these groups deemed to be religious charities is largely unrecorded. Statistics New Zealand’s 2004 income and expenditure figures for not-for-profit institutions show religious charities – about 10 percent of the estimated 97,000 not-for-profit groups in this country – received $534 million in donations. Such groups, the report says, “also have substantial investment income”.
But that figure does not include the many separate health, education and social services initiatives set up by religious bodies. Add in trading revenues and gifted lands, and the potential savings from tax exemptions are huge.
Details are hard to come by: churches do not have to file detailed information about the properties they own, money they make or how they spend it. Information on the Church of England’s land holdings, investment property and share portfolios is freely available online in the UK but such information is rarely available here. Neither the Anglican nor the Catholic churches responded to questions about their property holdings (to its credit the Presbyterian Church does have a record of if its income, expenditure and assets freely available online). Auckland-based Trust Investments Management manages a property portfolio for Anglican Church charitable trusts and tax-exempt charities said to be valued at some $400 million.
Statistics NZ’s report noted that, for religious groups, any surpluses generally go towards funding new capital projects to build and improve land and buildings. “Many churches,” a footnote added, “have permanent long-term building programmes.”
And other expenses?
Wallace: “If a religious organisation is earning $50 million a year in income, it’s not clear whether their expenditure of relief of poverty is equivalent to that. How do we know that the scale of their charitable work is comparable with their income? How much of that income is used on relief of poverty?” And how much on Harley-Davidsons, private yachts and prime rental properties?
Paul Morris, professor of religious studies at Victoria University, agrees – a tremendous amount of grassroots work is undertaken by the voluntary sector, including religious groups – but if organisations receive a subsidy from the state in terms of tax exemptions, they should open their books.
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