Saturday, April 29, 2006

Taxing belief

According to The Age, tax exemptions to Australian churches cost federal, state and local government more than $500 million annually. Complaints about this have come from commercial operators who see the tax-free status as unfair competition and from local government. For example, a new hospital wing built by a church that competes with a private hospital is exempt from land tax. The Melbourne City Council asserts that church exemptions from rates cost it $10 million annually and force a 10% increase in rates for other ratepayers. The recent study on aggregate tax exemption costs was commissioned by the Rationalist Society of Australia and a group at Victoria University.

Churches argue that charitable and community services get provided cheaply by them so the taxpayer gets value from tax exemptions. This is a fair point – many people working for these organizations have high moral aspirations and deal effectively with the problems of those in desparate need. Recent cases of abuse of people in aged care suggest the unadorned profit-motive does not always work - we need people with moral values for this work although there is should be no presumption that only those who believe in religion are moral.

An improvement on this arrangement would see explicit grants being paid to charitable organizations that would also be liable for full taxes. These organizations would then be held to account for how this money is spent via a public accounting system. But I cannot see this proposal as plausible in the current Australian political scene. So I won’t waste my breath elaborating ways it might be done.

Current tax exemptions go mainly to traditional churches but also to the Church of Scientology. I guess traditional Catholics and Protestants would frown upon this but I don’t believe differentiation on this basis is justifiable if the only basis for claiming a tax exemption is belief in a deity. It’s a belief that cannot be refuted using evidence that is being subsidized so particular believers should not be exempted. Why be selective in selecting among silly beliefs?

Indeed, when I look at this wicked world and consider the good work that my blog is carrying out in promoting love, peace and universal understanding I feel that I should declare myself a God and form my own religion that would seek tax exempt status. US firms offer advice on how to do this. Given my vast life experiences (economist for 35 years, parent for 20) I should be able to get my Doctor of Divinity degree in 7 days.

If this was granted – as it should - I would pontificate on the vexed question of whether condoms should be permitted for sex between partners, one of whom is HIV positive. In fact I already worked that one out. In a dream, last night, I had visions of a doctor and the pope debating the issue and, in a flood of universal illumination, I backed the doctor. I’d find it harder to determine who among the virtuous of this world should be punished and who among the dishonest crooks and the wicked should be inexplicably allowed to get away with it.

With tax exemption I could also take that long-awaited working holiday to help save pagan souls. And my proposed tithe, 8% of your gross salary, is competitive – the Hillsong Church for example charge 10%. You would receive a receipt for your contributions and a locket of your hair could be posted in remote sensing range of my aura.

I don't have any testimonials as yet but I have never been accused of abusing government grants – if I got money to help aborigines I would not spend it on my staff. Indeed that’s easy as I don’t have any and wouldn’t plan to. All proceeds would go to me.


Anonymous said...

oh come on, harry, that crack about 'celibate ex-nazi' was a really cheap shot. the very article you linked to notes that the pope's parents were anti-nazis and membership of hitler youth was mandatory


hc said...

Jason, I deleted the reference and rephrased. It was accurate but a bit cheap, I agree.

conrad said...

Abuse of the elderly has always happened, whether done by people employed by profit or non-profit. Its a hard frustrating job. Is there really any evidence that for-profit centres are worse ?

One could use the same arguements for lots of industries. Presumably we want teachers with some moral apsiration etc, but it doesn't stop good quality for-profit schools/universities existing (in the US where they do), and on the flipside, being not for profit doesn't stop poor quality organizations existing. It would be nice to have some non-biased data before making this claim.

Pesonally, I don't see why government money shouldn't be given to for-profit organization that do things good and efficiently if they are going to give money away for some community task (particularily as such organizations seem to have more scope for charging higher fees and providing a better service than church-based organizations seem to do).

Jan said...

'...I feel that I should declare myself a God and form my own religion'...Would it mean we'd have to pray together before the departmental seminar?...
I agree entirely with tax exemptions being unfair, distorting the market, and possibly providing the wrong incentives. On the other hand wasting money on additional government bureaucrats (to decide the grants) whose wages may use up most of the available funding may not be an appealing option either...

hc said...

Conrad and Jan

I think you are right about the distortions involved in subsidising such things as aged care. They certainly have disincentive effects - and lower the equilibrium level of service quality - on private competitive operators.

But I remain wary of being too tough on church and charitable groups.

It is undeniable that there are many selfless people from such backgrounds who provide community service at a good deal less than market prices. In my own experience I know many.

There are agency issues involved in servicing the needs of the elderly and disadvantaged. Levels of care are hard to monitor and, as Conrad suggests, it can be a demanding job. Its easy to cut corners to boost financial returns.

Maybe the signal of coming from an organisation that does advance care and respect for human beings as an explicit ethic is something we should not ignore. Note too the possible labour supply effects of putting the whole thing on a straight commercial basis.

Joel said...

The City of Melbourne can complain all they like about "tax breaks" for churches - but the consequence would be that a lot of old church buildings would get sold up and a lot of the cities most beautiful old buildings end up in the hands of developers.

That said, that might be a good thing for Christians - by forcing them to dispose of old, outdated buildings, the power of the established denominations would fall and focus would pass onto the newer, Pentecostal churches which meet around the CBD in places like Dallas Brooks Centre (City Church) and the function room at Arrow on Swanston (Life Expedition).

These churches have a good story to tell - they are new, young, growing and very multicultural (Life Expedition for instance consists mostly of International Students).

Terje Petersen said...

I personally think that the tax exempt status of the churches etc is an unwelcome distortion. In particular when they are undertaking full on business ventures (eg manufacturing weetbix).

One way forward would be to tax them all like corporations but set aside the revenue raised to provide grants to those doing charitable work in the community. The revenue could be divided up as a proportional top-up to whoever the public chooses to donate money to.

As it stands I think we can regard pretty much anything the churches have to say on the level of taxation in Australia as being heavily biased. Taxation keeps their competitors at bay.