Should Churches be Tax Exempt?

By Karen Kerr & Markus Wilhelm

Karen Kerr, the president of Edmonton Atheists and co-founder of Alberta Secular Conference says no.

In Canada many charities and other non-profits, including churches and religious groups, are tax-exempt if they are deemed to create public benefit. The exemption is premised on the idea that they provide a public good. However, churches differ from non-profit charities in some important ways.

Charitable non-profit groups include food banks, the SPCA, hostels, homeless shelters and the Salvation Army. The main difference between these groups and religious places of worship are the rules the non-profits must follow, which include the building being “unrestricted at least 70 per cent of operating time” and adherence to rules against discrimination (race, culture, religious belief etc.). While charities must focus on charitable acts, religious groups can focus on the needs of their congregations first, with the charity coming second. Even if religious groups totally ignore the stipulations about public access and non-discrimination, they are often assumed to be contributing to the community.

We need to start asking: Should all churches/religious buildings automatically be given tax exemptions, or should they first meet the same requirements as other non-profits?

Many religious groups do use their buildings to benefit the community while serving the public without discrimination. With others, however, services come with a trade-off of sitting through a sermon first, or are unavailable to certain demographics, such as the LGBTQ+ community. In White Rock, BC, for example, an LGBTQ+ group was denied a church rental in April 2019 because they weren’t aligned with the values of the church. Allowance for such discrimination is built into automatic approval for churches’ tax exemption.

Public revenue is lost in Alberta through such tax breaks. Some BC numbers can give us a rough idea. Saanich, a district on Vancouver Island, has a population of about 120,000. In 2018 Saanich determined they gave tax breaks on property to 46 churches, resulting in just over $550,000 of forgone revenue. Given Alberta and BC property tax rates aren’t so dramatically different and the fact Edmonton alone has over 250 churches, Alberta loses out on multiple millions of dollars worth of public revenue each year because of property tax breaks given to religious groups.

With a 2019 provincial budget that saw billions of dollars cut from social services, education and healthcare, we need to start looking at sources of revenue that haven’t been previously explored and examining who gets tax breaks. A public benefits test for religions would protect tax exemptions for those churches that contribute to the community in valuable ways without discrimination, while the ones that don’t fulfill the requirements can contribute to their communities by paying property taxes, which in turn fund the services we need. It’s a win-win.

 

Rev. Markus Wilhelm, the pastor at Sherwood Park’s Glory Lutheran Church and Chester Ronning Centre adviser says yes.

I’d like to rephrase the question: Should charities receive tax breaks? Churches are registered charities under federal law. According to the government of Canada, charities “must use their resources for charitable activities and have charitable purposes that fall into one or more of the following categories: the relief of poverty, the advancement of education, the advancement of religion, [and] other purposes that benefit the community.”

Most churches provide such things as meals for the hungry, refugee sponsorship and resettlement, clothing drives, overseas relief and development aid, community gardens, seniors housing, nursing homes, daycares, space for friendship and mutual support, music and cultural events, weddings and funerals, as well as grief support and various forms of counselling. Many of these are local, small-scale activities tailored to specific situations, such as the soup kitchen operating in a church hall. Others are larger scale, such as Catholic Social Services and the Mennonite Centre for Newcomers.

The law also recognizes the role of religion alongside that of education and other activities. The core purpose of churches and other faith communities is worship, ritual and spiritual teaching. Religious activity is concerned, among other things, with the transmission of the virtue of charity, which is another word for love. A maxim many traditions teach is “Do unto others as you would have them do unto you.” Christian faith teaches to “love your neighbour as yourself.” It also teaches that taxes should be paid to whom they are due. (Jesus famously said, “Give to Caesar what is Caesar’s and to God what is God’s.”) Government uses taxes, among other things, to help the poor, the sick, the elderly, the needy and the disadvantaged; churches teach charity and practise it wherever possible. Governments and society, by giving tax breaks to churches, are acknowledging this vital role of religious communities.

Not everyone recognizes the importance of worship, ritual and religious teaching. By the same token, not everyone requires a nursing home or language training, uses libraries or appreciates classical music. Charitable activity doesn’t require that everyone agree on its benefit. It’s enough that we recognize the cultural, moral or material benefits to society as a whole.

Charitable organizations in general have low administrative costs and are required by law to channel their income towards charitable activities and purposes. They are also closely audited. Canada’s current system of taxation and service delivery means that churches and other religious organizations will continue to play an important role in providing vital services. Most importantly, perhaps, religious traditions provide a moral foundation for the kinds of charitable services society depends on and which government is ultimately responsible for funding. Exempting churches from taxes is a way of recognizing this role too.

 

Karen Kerr responds to Markus Wilhelm

My dialogue partner has tried to change the topic question in an effort to equate churches and religious groups, first and foremost, with charitable organizations. It’s important to know that organizations offering charity through a religious orientation aren’t necessarily focused on charity as their first goal. Religious groups’ mission statements tend to include the advancement of religion as their main goal, not the charitable cause that’s also supported. This main mission is to proselytize. Charity is secondary—and in some cases the charity work even provides an outlet for the main mission of proselytizing.

My argument, then, is against the assumption that they be given tax breaks and charitable status automatically, and I further contend that advancement of religion cannot be the only benchmark.

In order to qualify as a charity in our country, you must show that your organization follows laws and public policies, including those against discrimination. While my dialogue partner points out that religion is concerned with teaching the virtue of charity, some beliefs within some religious teachings can directly conflict with public policies.

For example, while public policy does not allow for discrimination, some religions actively discriminate even within their own hiring and hierarchical systems. Women and LGBTQ+ people are not allowed to hold certain positions in some churches and are segregated in others. Some religious groups actively teach that homosexuality needs to be “cured,” and in some more dangerous examples use their untaxed revenues to fund “conversion therapy” (a practice that is being banned in many cities across our country because it is so harmful, has no science behind it and goes against human rights). Same-sex marriage is not accepted or performed in certain religious groups. Most religions have rigid ethical codes written into them as part of their teachings, which cannot waver or change even when faced with our modern understanding of humanity and human rights.

Canadians also all have a Charter right to freedom of (and from) religion, whichever religion you choose that to be. If you find yourself in the unfortunate position of requiring a helping hand via a charitable organization, you certainly shouldn’t have to also be faced with religious views that differ from your own as part and parcel with the services.

Pastor Wilhelm also makes the assumption that religions provide our moral foundations. The golden rule (ethic of reciprocity) he quoted is found in many cultures, going back all the way to ancient Egypt, long before the Abrahamic religions. While I do not have the space to go into detail in this dialogue, I’d be remiss if I didn’t point out that many moral foundations have also been witnessed in the animal kingdom, evolving as we evolved into humans (if you’re interested, research the work of primatologist and ethologist Frans de Waal).

Simply put: Religion does not have a monopoly on altruism.

So, this raises a new question: Why is “advancement of religion,” which can go against public policy, still automatically recognized as charitable? Maybe it’s time to look at our charity laws and make amendments.

My dialogue partner offered a list of wonderful charitable services that most (not all, as he admits) churches provide, without noting that none of these services require “advancement of religion” superimposed on it in order to be a benefit to communities in need. His entire list of charitable causes can be supported perfectly well through secular organizations instead. Indeed, advancement of religion as the first mission, with charity merely secondary, may actually affect how well a religious charity can meet the needs of those who require it, if that particular charity has rigid ethical codes as part of its teachings.

Secular charities also have to work under tougher conditions. While not everyone needs to access a food bank or a nursing home, as my dialogue partner points out, those that do require these services shouldn’t be denied them based on their gender, relationship status or any other reason that in Canada has been deemed discrimination. Yet religious groups sometimes do deny charitable services on these grounds (or at least deter people who are often discriminated against from seeking those services), leaving secular charities to pick up the slack.

I’d like to reiterate: It is easy to see the merit in allowing tax breaks for organizations that focus on charity work while still adhering to public policy, but this isn’t always the case with many religious groups. Instituting a public-benefit test would be a fairer way to ensure that those religious groups and churches that meet the requirement that other charities must can continue to reap benefits of those tax breaks afforded to them as a result. Those that do not can contribute to their communities through taxes.

 

Markus Wilhelm responds to Karen Kerr

Charitable status should be reserved for organizations that create public benefits and that operate within the laws of the land. Nobody should automatically be given a tax exemption. In this respect I am in complete agreement with Karen Kerr.

I question, however, whether the rule of unrestricted access 70 per cent of operating time is a good argument. It cannot mean giving access to facilities for activities that contradict the organization’s mission and purpose. Nursing homes and seniors facilities welcome young and able-bodied people to come and visit residents, but they don’t allow them to move in. LGBTQ+ groups welcome anyone seeking support or information on sexual orientation and gender issues, but probably not those who peddle “conversion therapy.” Libraries welcome everyone to spend time, read or borrow books, but not to hold a choir practice. The atheist society would expect people of faith to refrain from proselytizing its members.

Thus, while all people are certainly welcome in churches, the assumption is that they come to practise religion. A church would not be a church if its facilities were used by the local gun club, a political party or indeed members of a different religion 70 per cent of the time. In other words, every organization must “discriminate” in one way or another in order to fulfill its mission. If the mission and purpose fall within the definition of what is a charitable organization, constituting clear benefits for society, then they should be eligible for tax exemption.

The benefits of churches, as I said before, go far beyond the walls of their houses of worship. The Salvation Army’s mission, for example, is clearly charitable, as Kerr recognizes. (The Salvation Army is actually a church!) The Catholic Covenant Foundation operates public hospitals, nursing homes, auxiliary hospitals and other services throughout Alberta. The church denomination I belong to founded the Good Samaritan Society, which operates 29 seniors care facilities and programs in western Canada. While most of these facilities and services are not primarily funded or staffed by church members, their existence illustrates the connection between the worshiping community and their social impact well beyond the walls of the church building. People do get inspired and motivated by the sermons they sit through in church. Because Jesus said at the conclusion of the story of the Good Samaritan to “go and do likewise,” many churchgoers do just that.

There are self-serving people in the church, as there are everywhere. Fraudsters use their tax-exempt status to fleece vulnerable, gullible people, giving other religious people a bad name. Convicted felon Jimmy Bakker, for example, offers buckets of freeze-dried survival food for what he says is the imminent end time, in exchange for “charitable donations.” He also boasts that he helped elect Donald Trump. Trump in turn thanked him and issued an executive order to protect the tax-free status of quasi-corporate entities such as Bakker’s. Phoneys need to be stopped, and fraud punished. Those who subvert the mission of the church for their own ends should have their charitable status revoked. It is the government’s duty to keep churches in line with the tax code.

In January 2020 the US evangelical magazine Christianity Today ran an article titled “The Hidden Cost of Tax Exemption.” Its author, Paul Matzko, a church historian, questions the tax-exempt status of US churches, arguing that while tax exemption can be used to silence churches politically, it can also lead to collusion between church and state. Maybe it is time, the article concludes, for this privilege to be ended.

In the same issue of the magazine, on the other hand, a sociologist unaffiliated with a church offers the opposite opinion, based on research about churches’ contribution to the local economy. This so-called “halo effect” includes employment, food and the flowers that congregations buy, as well as direct financial savings such as when a pastor, through counselling, helps prevent someone’s suicide. Of course, this invites the question of whether or not taxing churches would decrease their charitable activity in the community. The debate rages on.

How much churches’ tax exemption might be costing society in lost public revenue is debatable. I would venture it’s considerably less than what is lost from for-profit industries through unpaid taxes. Oil and gas companies, for example, owe close to $200-million in unpaid property taxes to Alberta municipalities. In any case, considering what I’ve already written, I believe the overall benefits of faith communities to society outweigh the loss of revenue.

While paying taxes is a civic duty for Christians and the issue of tax exemption is not a hill I would want to die on, I believe that in Canada, under present rules, most churches deserve their tax-exempt status and should be treated the same as other charities.

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