Every now and then I hear some grumpy atheist saying that churches should be taxed. This will not work. If the government were to tax churches tomorrow in the same way that they tax businesses, churches still would not pay tax.
Churches are not-for-profit organisations. They do not make a profit which can be taxed. To put it simply, a business has their gross income, which is all the money which comes into the business from sales and other means. Apart from the GST, businesses do not pay tax on their gross income. They have their business expenses, rent, wages, interest, etc. What is left over (if anything), is their profit. Businesses pay tax on the profit, not their gross income. Churches do not pay tax because they do not make a profit. Their income and expenses match. There is no profit to tax. They are structured that way. If the income and expenses of a business matched, or the expenses were greater than the income, they would not pay any tax either.
Just like a business, which does not make a profit, does not have to pay tax, if the government were to change the rules tomorrow and said that churches had to pay tax, they would not pay tax because they are not making a profit to tax.
A church’s expenses includes the wages of the ministers and other church employees. Then, they have to pay income tax like the rest of us. “Churches don’t pay tax” does not mean that the ministers are stuffing the offering money into their pockets and walking out the door without paying tax on it.
Churches have to submit financial statements to show that they are not making a profit. You can go to the Australian Charities and Not-for-profits Commission website, look up a church and see how their total or gross income was spent on expenses.
Yes, there are some big churches and they appear to have a lot of money, but they are still not making a profit. It all goes on expenses. Admittedly, there is the potential for abuse, Many churches used town a manse, a house where the minister and his family lived. The only manses I have been in were typical three bedroom houses. While the rest of us pay for our homes after we have paid our tax, some church leaders have used church money to build mansions for themselves and it still counts as an expense. This sounds like bending the rules. It is also risky because if there are problems in the church and they sack the minister, he can lose his home, which would not happen if he had paid for it like everyone else does.
Moreover, most churches are not mega-churches with multimillion dollar budgets and ministers who live in mansions. According to the 2016 National Church Life Survey, the average church size in Australia is 121 people. According to the 2019 National Congregations Study Religious Congregations in the 21st Century, the average church size in the United States is 70 people.
According to the Australian Taxation Office, not-for-profit organisations include church schools, churches, community child centres, cultural organisations, environmental protection organisations, neighbourhood associations, public museums and libraries, scholarship funds, scouts, sports clubs, surf lifesaving clubs, traditional service clubs, religious groups, not-for-profit aged care homes, homeless shelters, disability service organisations, universities and colleges, animal welfare organisations and artistic or cultural groups. Some churches have been criticised for manipulative fund-raising practices (“Give us money and God will bless you”), but some of these organisations raise money through gambling and selling alcohol.
Likewise, we sometimes hear the cry that churches should pay tax after some sex scandal involving a priest or minister, as though churches not paying tax was conditional on their behaviour. There would still be no profit to tax. However, we do not hear calls for sport organisations to lose their not-for-profit status whenever there is a scandal involving a sports star.
There is also the argument that if churches are going to get involved in politics or speak on political issues, they should pay tax. How far Christians should get involved on politics is another issue. (I am not that interested in getting involved in politics, but I don’t like being told I shouldn’t get involved.) Spokespeople for other not-for-profit organisations and charities speak on political issues which are relevant to them. Why should churches be any different? There are a lot of people who don’t pay tax, the unemployed, students, pensioners. No one would suggest they should be denied the right to participate in the political process. Churches are buildings. They do not have political opinions. Christians, who are members of these churches and usually pay income taxes, are the ones who express political opinions and get involved in politics.
Some atheists might suggest that we should tax churches’ gross income. If the government did the same thing to profit-making businesses and tried to tax their gross income, almost every small business in Australia would give up and close down. If the government did take a chunk of churches’ gross income, they would not be able to pay their expenses. These expenses can include charity and welfare programs, Do we really want these programs to suffer to satisfy some vindictive atheists? Churches would have to raise more money to pay their tax and their expenses. No doubt there would be atheists going, “Tut, tut,” at the churches for raising more money.
There is no suggestion that other not-for-profit organisations should pay on their gross income, just churches. This is discrimination.
Churches are voluntary organisations. People, who have paid tax, get together and choose to give some of their post-tax income to a not-for-profit organisation. Those, who want to tax churches, basically think they are entitled to other people’s money and want them to be taxed again.
Malcolm Nicholson 