Tuesday, July 14, 2009

Time to tax the business of religion -- no crisis should be wasted

Religion is regarded by the common people as true, by the wise as false, and by rulers as useful. - Seneca (ca. 4 BC –AD 65)

The latter part of this quote, that religion is regarded by the rulers as useful, must be the underpinning of Canada’s designation of “the advancement of religion” as a charitable purpose in its own right, and therefore subject to the special tax status granted to charities under the Canadian Income Tax Act.

According to federal requirements, to meet the category of religion, an organization must have “an element of theistic worship”, meaning the worship of a deity or deities in the spiritual sense. Why would a supposedly secular state classify as charitable organizations whose purpose is not ministering to the needs of the needy, but rather convincing the common people that they owe obedience to invisible sky-gods?

When most people think of charity, they picture poor little orphan children being fed, clothed, housed and educated. We see many disturbing pictures on television of these kids in appeals for charitable donations. Granted, there is real charitable work undertaken by religious groups and that work deserves to be recognized by the tax statute.

But is much attention being paid to the money raised by religions for proselytizing purposes?

It is not a small number.

The Canadian Secular Alliance analyzed data obtained from the Canadian Revenue Agency’s Charities Directorate for the year 2007. Leaving out of the analysis money used for a separate Catholic school system, this is what it found with respect to the public subsidization of “the worship of a deity or deities.”

The loss of tax revenues attributable to tax-deductible donation receipts was approximately $900 million, and a bizarre appearance of direct government transfers amounted to another $63 million. The CSA has not yet tracked down the source of these latter funds, but after eliminating all the other sources of revenue accounted for in the data all the remains is that this money is a direct transfer from government accounts.

The CSA is also continuing to investigate the lost tax revenue at the municipal level from the exemption of religious properties from property taxation. A very preliminary estimate suggests it may be around $160 million.

In short, in the year 2007, government treasuries “lost” over $1.2 billion to the earthly agents of the sky-gods.

There are also other tax savings enjoyed by religious organizations, such as a rebate of sales tax and the exemption from land transfer taxes in some jurisdictions. Such amounts are not included in the foregoing analysis. Also excluded from the calculation were religions that reported some charitable work, no matter how small.

So the amount of lost tax revenue could be much greater.

Very little that appears in Canadian statutes is original. Much of our law is simply a carry-over from English common law that we obtained through our long years as a British colony. The test for determining the charitable status of a religion is no exception. The origin is found in The Statute of Charitable Uses, 1601. The formula for the test was elaborated by The House of Lords (the U.K.’s highest court of appeal) in 1891. That standard was abandoned by the U.K. in 2006.

Here are some things that bother me about this. We have a seriously damaged economy, with high unemployment and a government that has abandoned balanced budgets in favour of deficit financing. The problem with government deficits is that they eventually have to be paid from taxes. In a bad economy, tax revenues fall. In good times, maybe we can afford the luxury of allowing the “business of religion” to be tax sheltered. But, I think the day has come when we need to put an end to this.

A second consideration is the fairness to the growing demographic of those in this country who consider themselves non-religious. It is anticipated that number will come in at about 25% when the next census is taken in 2011, making the non-religious the second largest demographic by religion after Christianity. Why should these people be taxed to pay for religion?

Finally, our world has moved on since the time of Elizabeth the First. If the U.K. can see through the folly in the era of Elizabeth the Second surely Canada can.

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