Should Churches Have To Pay Taxes?

USA World

In Montreal, Canada, churches are becoming concerned about hosting community groups after being handed bills for municipal taxes.

Joel Coppetiers, the Minister at the Cote des Neiges Presbyterian Church, was shocked when his institution received a municipal tax bill in early 2015.

“It was the first indication that something had changed,” said Coppetiers. Many churches are reporting being saddled with tax bills that could jeopardize their ability to host community groups and leave their heritage properties vulnerable to real estate developers.

Provincial law exempts churches from paying municipal taxes, but a legal loophole is being enforced by the city in order to extract tax revenue.

“The indication is there’s not an exemption for the church as a whole,” Coppetiers said, “There’s only an exemption for those areas used for public worship and things directly related to it.” Essentially, if a space is vacant for several months or used for other purposes- personal, meetings, etc.- then it’s taxable. As a result, many of these churches that host community groups, such as food banks, Girl Guides or Boy Scouts, are facing some upcoming high taxes.

Additionally, should worship services be suspended for any reason, the parish can swiftly be taxed. When Trinity Memorial Church closed earlier this year, the city started enacting taxes immediately following the last service. As a result, the church felt pressured to sell quickly, accepting one of the first offers it received from the Stanford Properties Group within two months of closing. It’s a departure from the past, when the property would retain its tax-exempt status until a new congregation or community-oriented organization purchased it. Most of the time, this process would take years given the slower pace of decision-making on the part of organizations typically governed by a board of volunteers.

“One of the ironies here,” Coppieters told reporters, “is that while all of these great architectural gems are being lost, I know of at least 15 to 20 congregations who are actively looking for worship space...but they can’t get in there quickly enough to beat the developers.”

This issue of places of worship owing taxes and fighting the city’s exemptions office came as a surprise to city politicians, including Councilor Peter McQueen.

“Already our churches are in danger,” McQueen said. “They’re having a number of financial problems and this is a further low blow.” The councilor said his party would study the exemption issue, but said Montreal’s Executive Committee needs to step up. Montreal City Council has not yet commented on the issue, but its website says the following:

“Montreal’s City Council levies a variable rate tax on all properties situated within the city. Rates depend on property category.”

There are 1,341 buildings in Montreal that have tax-exempt status because of their religious associations, but over the last 3 years, 40 institutions lost their status because they were renting out spaces for other purposes.

“If we don’t do something you’re going to see churches closed, churches possibly torn down, heaven forbid, certainly converted away from community use,” McQueen warned. However, the move has pleased some citizens.

“Bottom line: Montreal is getting it right,” one local blog wrote. “Taxpayers should not be in the business of subsidizing religious superstition. It’s time to tax the church.”

Although I’ve been hard-pressed to find reliable numbers for Montreal itself, it doesn’t take a leap of faith to imagine the amount of tax money the city is missing out on from its churches. A recent report from the Secular Policy Institute shows that tax-exempt churches cost US taxpayers at least $71 billion every year. Religious groups receive $35.3 billion in federal income tax subsidies and $26.2 billion property tax subsidies. They also enjoy approximately $6.1 billion in state income tax subsidies, along with $1.2 billion of parsonage, and $2.2 billion in the faith-based initiatives subsidy.

Many Americans believe that churches enjoy their tax exempt status because they perform charitable works in the community. However, a report from the University of Tampa study points out that “even if churches were merely held to the standards of other non-profit agencies, this could generate $16.75 billion in tax revenue per year.” If the standard is the charitable work, why shouldn’t they be held to the same standard as other charities?

But in that strain of argument, let’s hold churches accountable for the charitable work they do. Hint: that would require drastic changes. For example, the Mormon Church spends about 0.7% of its annual income on charity. A grand total of 0.7%, while the American Red Cross uses 92.1% of revenues for physical assistance. The report goes on to discuss how Wal-mart gives around $1.75 billion in food aid charities each year- 28 times more than what the United Methodist Church gave to charity and double what the Church of Latter-day Saints gave in the last 25 years.

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