Will Duterte dare to tax the church?

SINGAPORE – The words were harsh to and fro. It started during the campaign and continued over the past weeks. Mr. Duterte called the bishops hypocrites. The bishops in response said they would remain quiet, but not before ascribing to Mr. Duterte the arrogance of Pilate.

Amidst all that, the new Duterte administration announced tax reforms, among them updating the 20 year old tax brackets and rates. Former BIR chief Kim Henares had warned the Duterte administration must find new sources of revenue or face serious fiscal problems.

Irritated by the noisy bishops, some Duterte supporters want the new administration to start taxing the religious sector. Taxing the churches will also clearly set the demarcation line between church and state.

If there is a president who can carry out that very dramatic shift in policy, it will have to be the no nonsense Mr. Duterte. And there is no danger Mr. Duterte and his Finance secretary will be hit by lightning if they do tax the church.

There is no better place to understand how to tax churches in our neighborhood than Singapore. Here, the governing laws clearly delineate what belongs to Ceasar and what belongs to the church.

Churches get tax considerations in this city state not because they represent religions, but because they register as charities and that’s the basis of their tax exemption. Churches are required to make an accounting of their finances. Income earned from side businesses must be taxed like any commercial transaction.

Some recent cases were cited by the Singapore Policy Journal in their website published out of the JFK School of Government in Harvard. The handling of the cases shows how the Singapore government seriously enforces its laws.

“On Oct. 21, 2015, all six defendants in the City Harvest Church case were found guilty of Criminal Breach of Trust in the false declarations and misuse of approximately S$50 million in church donation funds (for varying purposes, primarily to fund the international singing career of the pastor’s wife. Public queries have been raised about the pastor’s $10 million dollar penthouse in Sentosa, and his wife’s expensive lifestyle...”

In 2007, a Buddhist leader was caught for misuse of $50,000 of charity funds from Ren Ci Hospital (which was established by his Buddhist monastery) and numerous “questionable” loans to fund his lavish lifestyle.

“Although no wrongdoing has been insinuated, public queries have also been raised about the New Creation Church’s billion-dollar project with Capitaland to build a commercial retail venue in Buona Vista using charity funds...

“Large religious organizations are thus coming under scrutiny now – are the rules governing their use of finances too relaxed today, thus leading to these excesses?”

Elsewhere in the world, there is also increasing talk about taxing churches. An op/ed article in Forbes observed: “it’s worth shaking up conventional wisdom. Re-examining fundamentals—like the tax exemption afforded churches—can be downright liberating. We may have a hard time criticizing a church or religion, but taxing them might be different.”

Indeed, the Gospel tells us Jesus himself is not against paying his own tax. He said we should give to Ceasar what is Ceasar’s and to God what is God’s. He asked one of his disciples to go fish in the lake and he will find a coin in the mouth of a fish. The disciple was instructed to take the coin and pay the tax due from him and from the disciple.

So, if the Son of God didn’t mind paying taxes, where did we get this practice of exempting the church from paying taxes?

I googled and found an op/ed article in a website appropriately called: http://www.tithing.com. The article traced the origins of this practice of exempting the church from taxes. It is apparently all very medieval.

“In the medieval times the Roman Catholic church and the English throne were in marriage with one another, so therefore, the Catholic Church was exempt from paying taxes. The church and the government were essentially one organization, so if the government were to tax the church, they would be taxing themselves.”

The article noted “the tax exemption that was imposed upon the Catholic Church would lay the foundation and traditions that we find in our modern laws today… Although the church and the state no longer operate as one entity, these tax-exempt laws seem to have been ‘grandfathered’ into our common laws.”

But why should we continue this medieval practice? The same article cited Erik Stanley from LATimes.com who says, “In general, governments believed that churches, along with other types of community groups, enhanced and supplemented government services such as feeding the hungry, housing those in need of shelter and in general using private funds for public good.”

That sounds like a good reason to grant tax exemption to churches as some (but not all churches) do help provide needed social services. But the tithing.com article author observed that is not always the case anymore.

“The government relishes the opportunity to take on more social responsibilities while the church gladly passes on the torch. Now that we are free from taking care of people’s needs, we can spend more money on ourselves, on our church buildings, on our programs, on our stage design, and on our sound equipment. We relish the opportunity to beautify our image, while the government relishes the more godly response.”

The tithing.com author complains, “Giving statistics state that the church spends 85 percent of the funds it receives on internal operations and only three percent of our money goes towards aiding and ministering towards the unsaved.”

Transparency that is unheard of today in the management of church funds, is another reason why churches must pay taxes like the rest of us. An article in The Economist noted “Billy Graham, for example, long ago opted not to classify his empire as a church, in part because he wanted to encourage other religious charities to be transparent and accountable.”

Today, church leaders do not reveal anything about their finances or their governance, and are largely unaccountable to the public. That’s why the scandal in the Vatican Bank happened which is now being cleaned up by Pope Francis.

Indeed, Mr. Duterte can rightfully accuse church leaders of hypocrisy by demanding transparency from government. Cardinal Tagle even launched a slogan “Huwag Magnakaw” as if it is only government officials who are capable of stealing.

But tough as Mr. Duterte is, I doubt he is brave enough to tax churches. He may abhor the Catholic bishops, but he is in bed with that Quiboloy fellow and indebted to the INC for supporting him.

These two religious groups (and we can add El Shaddai as well) are in dire need of transparency too. We were recently shocked to see pictures of the expensive private jets of both Quiboloy and the INC head. I doubt if they paid paid proper import taxes on those planes.

We were dismayed to see how these religious leaders live in utter luxury while their members, many poor as many Pinoys are, are obligated to contribute what little they have to support their lavish lifestyle.

I once asked the senior pastor of the Christian group I am attending if he thought it was right for the church to pay taxes. He said he is willing to pay taxes, but right now he is not obligated by law to do so.

Tax the churches? It sounds like too much of a revolutionary idea that even a Duterte may not have the guts to do. But it is an idea whose time has come. It raises funds for government to use to help the poor with social services the churches are unable or unwilling to provide.

And best of all, church leaders can become true to the teachings of Christ and resist the temptation to live in luxury. Being required to pay taxes will force them to show their congregation they are honest in the handling of their funds.

As The Economist article puts it, our “reward is a much-needed burst of transparency. Let there be light!”

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco.