Should religion be deemed a charitable cause? And should the state subsidise religious proselytisation? These are questions asked by an article in the Listener this week. The argument put forward is that there are very wealthy and powerful religious charities in New Zealand that profit from their tax-exempt status. And the Government is about to make it even easier for such not-for-profit groups to collect greater funds. This is the first blog post of many in a series examining the contemporary Establishment in this country. [Read more below]
Due to an archaic definition in New Zealand’s charity legislation the promotion of religion is regarded as a charitable activity. As a result, the taxpayers of New Zealand are subsidising religious proselytization. This occurs through the tax-exempt status of churches – including those from the very established Anglican Church through to Church of Scientology, the Brethren Church, Bert Potter’s Centrepoint Community etc.
Sally Blundell’s Listener article entitled ‘The god dividend’ says that religious groups in NZ are subsidised directly by being tax-free, and are indirectly subsidised through ‘rebates given to those who make donations’ (p.27). Apparently of the 97,000 not-for-profit groups in NZ, about 10% are religious charities, and get their tax-exemption not on the basis of any charity work they might do but on the basis that they "advance religion". Therefore Blundell asks, ‘Should the state, on behalf of believers and non-believers alike, support religious proselytisation?’ (p.27).
These churches are sometimes very rich. According to Statistics NZ, these religious charities ‘received $534 million in donations’. On top of this, according to Blundell, they have other income including ‘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’ (p.28). She says that ‘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’ (p.27).
Amazingly, any businesses owned by these religious charities are also tax-exempt. Blundell says that ‘any business income is exempt so long as the trust, society or institution involved carries out its charitable purposes in New Zealand’ and there is no chance of a pecuniary profit for any individual (p.27). The classic example is of our biggest breakfast food manufacturer:
Take Sanitarium Health Food Company. An arm of the Seventh-day Adventist Church, its income form Weet-Bix and other breakfast foods is “applied solely for church-related purposes”. As such it has all the tax advantages of a charity (p.29).
Political sociologist Dr Max Wallace is director of the Australian National Secular Association and has just published The Purple Economy: Supernatural charities, tax and the state, which is partly what the Listener article is reporting on. His book refers to religious charities as ‘supernatural charities’, and argues that they should come under the same scrutiny as secular charities, and that their extensive business interests should be just as scrutinised as other businesses are. In the Listener article he asks some good questions:
What 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 (p.27).
Does the subsidisation of these ‘supernatural charities’ actually cost us anything? Definitely. As the NZ Association of Rationalists and Humanists says: ‘If religious trusts such as these paid tax and property rates like the rest of us, it would reduce the individual tax burden considerably’. Wallace also refers to an Australian example of where research has bee done:
A 2000 inquiry by the city of Melbourne concluded that its property rates were 10 percent higher than they needed to be because of non-rateable church property (the Catholic Church, Wallace says, is Australia’s largest private landholder (p.28).
Also, of course, the religious-owned businesses (such as Sanitarium) that do not pay taxes clearly have an unfair competitive advantage over others.
Put of the problem is the lack of transparency. As the Listener points out, ‘The wealth of these groups deemed to be religious charities is largely unrecorded’ (p.27). The ‘churches do not have to file detailed information about the properties they own, money they make or how they spend it’ (p.28). Therefore Max Wallace asks: ‘How much of that income is used on poverty relief?
‘And how much on Harley-Davidsons, private yachts and prime rental properties?’ (p.28).
Prof Paul Morris of Religious Studies at Victoria University apparently agrees that this could be a problem, and says that ‘if organisations receive a subsidy from the state in terms of tax exemptions, they should open their books’ (p.28). The issue of ‘mission drift’ is also raised – this is where ‘religious hospitals and emergency services set up to attend to the needy but now charging for their services while also keeping their tax-exempt status’ (p.28).
Labour’s reforms to the charity sector
The current Labour Government has been making some changes to the charity sector. So you might expect them to reform this archaic area or applying more scrutiny to the subsidies going to the supernatural groups. However, instead the Government has decided to make the rebates for charities even more generous. From April 2008 the tax rebate cap for charitable donations – currently set at $1890 – will be removed. Now a donor can get a rebate for any amount up to the value of the donor’s net income. The Association of Rationalists and Humanists says this ‘financial windfall for churches that could see them receive millions of extra dollars of tax payer money’.
It seems that as recent governments have rolled back provision of social security, these governments want to encourage the growth of philanthropy. The Listener says that ‘In 2005, we gave $1.27 billion to philanthropic and charitable causes’, and ‘About one million people volunteer their labour to any one of the 97,000 non-profit institutions in this country’ (p.27).
Along side these changes, has been the establishment of the new Charities Commission. This will provide much greater regulation of charities, and while it won’t address the problematic status of supernatural charities, it will apparently clamp down on those charities that might be spending too much of their time doing ‘advocacy work’. The Commission has made it clear that any ‘charitable organisations set up with advocacy as one of their main roles, will not get past the commission’s gates’ (p.28). While there might be some logic in this, there’s also a huge danger that under Labour’s new rules the state will now clamp down on charities that advocate too strongly for the poor.