BrightWorld

Dreams, Optimism, Wisdom

TAX THE CHURCH ASSETS & INCOMES! July 1, 2010

Erle Frayne Argonza

I will declare my position here about church assets in the most transparent terms: tax church assets & incomes. I will demonstrate the great financial potency of the Church via its assets, and the possible contribution of this institution to sustaining a very healthy fiscal environment if its assets and incomes were taxed today.

So privileged is the Church—the Catholic Church—in the country that it practically exercises power in all spheres, private and public, and remains unchecked in its unbound power and abuses committed within its confines. Because the Catholic Church commands 85% of the religious devotees in the country, the Church leaders enjoy a blessing of power accorded to no other entity in the country. Not even the Presidency, no matter how popular the incumbent president may be, can command 85% of constituents supporting the chief executive’s policy initiatives at any given time.

So, in the situation of hegemony over the devotee population by the Church, its leaders enjoy a confidence that they easily translate into privileges. A chief privilege is the ownership & control over assets without being taxed at all. Never mind if the assets are income generating, which is practically true in all dioceses and archdioceses in the country.

As already mentioned in a previous article, the Church is the biggest landlord in the Philippines, and necessarily a part of the problems spawned by landlordism. It also owns vast business or income-generating enterprises, including but not exclusively the schools run by the Religious Orders. Likewise does the Church own financial institutions such as a big bank. Church leaders continue to denounce injustices in the country, but are blind to the possible contributions to injustices by their landlordism and non-taxation of their assets.

Look at all the palaces that are abodes of the bishops, archbishops and cardinals in the country. Not even the wealthiest families reside in palaces as domicile. Only the President of the Republic resides in palaces here: the main Malacanang Palace in Manila, and the Summer Palace in Baguio City. But look at the Church leaders, they practically swim in such pomp that exceeds the lifestyles of the wealthiest. And this they do as representatives of Christ!

As to how huge is the total expanse of the Church properties and annual incomes we can only make rough estimates. Church incomes and asset reports are not the kind of things that are disseminated to the public for appreciation or scrutiny. The transparency practice of corporate groups and government agencies, including local government units or LGUs, of disseminating their asset & income reports in public is only peculiar to them. The Church is exempted from such practices, and so are the underworld criminal rings and rebel movements.

But it is no exaggeration a claim that the Church annual incomes would be equivalent to around 15% of the Gross Domestic Product or GDP. Even if we reduce this to 10%, that’s still a whopping amount. It means that on the average the Church should be contributing at least 10% to the aggregate tax revenues. Put in another way, the state has been losing an amount equivalent to 10% of revenues due to hyper-privileged tax exemption on church properties & incomes, or around $2.5 Billion (nominal value).

If the country generated a total of U.S. $550 Billion in 2006 (using Purchasing Power Parity or PPP), then 10% of the GDP equals $55 Billion at the end of last year as the equivalent contribution by the Church. The situation is that the income account of the Church is not actually included in the official estimates or reports as far as my knowledge is concerned. In which case Church income accounts are considered, in standard economic language, Underground Economy where it joins all the other income-earners who do not pay taxes at all.

Imagine if the Church were to pay $2.5 Billion or P100 Billion + in taxes at the end of each year, then the budgetary deficit gap will be so instantly filled up that the fiscal health of the country will suddenly be buoyed up to Excellent level due to gross surplus. Not only that, the nation will also suddenly join the Budgetary Surplus throng of nations. In turn, its credit-worthiness will be boosted to the top level, thus permitting the country to embark on more ambitious development projects due to its newfound fiscal health, thanks to the Church’s payment of its taxes.

But such a scenario is only wishful thinking for now. And for as long as the Church is so privileged with tax exemption, the state will have to squeeze out every idea available from bureaucrats about where to get the money to plug the budgetary deficit and upgrade the country’s fiscal health. The state already compromised the country’s international trade leverage, where the country instantly lose over P300 Billion annually in potential revenues due to trade liberalization. Just raising the import duties by an automatic 2% will derive us new revenue of past P150 Billion which can easily plug the fiscal hole. But that’s a non-option, nay a highly toxic proscription, and so the option must be placed elsewhere.

If only state officials, business groups and civil society would ‘discover’ this option and build a consensus surrounding this option, then maybe the Church will give way and do its share of its fiscal obligations to the country. But whether this is possible, given the entrenchment of Church lay leaders in government and the business sector, is a huge question mark. Not even civil society, which benefitted so much from using Church utilities and assets for its advocacies and social development pursuits, will ever open its eyes to this possibility that will invite the ire of its Church benefactors.

Knowing the perpetually rambunctious behavior of the bishops, who seem to be like all-powerful gods out to bamboozle the state and the social sectors with their moralistic positions, it is a tough decision to get them to recognize their fiscal obligations at all. Not even the dictator Marcos was able to squeeze the coffers of the Church for such fiscal contributions, although he did attempt at some moments to do so. Marcos was overthrown by the Church, if one recalls properly, in collaboration with other vested interest groups. So this is the possible political cost of rocking the boat of the bishopric gods.

And aren’t the bishops involved today in overthrow attempts against the incumbent president? The chief executive hasn’t even considered any thought at all about taxing Church properties. It’s simply the rambunctious bishops who are ever in search for loopholes in other people’s character, notably state officials, which in effect conceals their own defects and loopholes. And they found such loopholes in the person of the president and the first gentleman who have to work hard to survive the seemingly perpetual attack against their character by the church gods and demigods.

So this option of taxing Church assets & incomes will have a long way to go yet. But to say that it can’t be done is an exercise in illusory fatalism. Turbulence is the norm of the day, and who knows, some couples of decades from now a patriotic group will rise to the fore as the hegemonic political formation, after storming the palace via a putsch or people power. And being totally autonomous from Church interest and influence, this group or coalition will simply begin exercising its patriotic duties with greater political will and extent than those done by other dominant groups in the past, notably the taxation of Church assets & incomes. Being no closed option, future fiscal history gladly awaits its unfolding.

[Writ 20 November 2007, Quezon City, MetroManila]

 

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