POSITION PAPER

Thesis: Religious institutions’ activities should be taxed.

Argument 1: taxing religious institutions would draw the line between church and state

The separation of Church and State shall be inviolable. (Article II, Section 6), and, No law shall be
made respecting an establishment of religion, or prohibiting the free exercise thereof. The free
exercise and enjoyment of religious profession and worship, without discrimination or preference,
shall forever be allowed. No religious test shall be required for the exercise of civil or political
rights. (Article III, Section 5).....

The idea behind not taxing religion is to keep it out of politics. This while a good idea and thought but
doesn't work this is shown in how all most all if not all presidential candidates (especially Republicans)
make a huge deal out of their religion mostly christen. Not only that but most churches or temples or
other places of worship talk about different aspects of politics. This shows that the church is already in
politics and therefore if it is included it should be included fully this means taxes to make a profit for the
state. My prior point aside there is also the idea of thinking of a church as a business. Before the point is
risen yes churches could be counted as charities but they are not a non profit as in the priests or other
holy people make a living off of it and while they should no be taxed as much as a fully for profit they
still should be taxed with a tax break to even the playing field. And finally I come to my point on the
profits from these taxes. It is known that while the amount does differ source to source it is consistently
a large number even for government. This could allow the county to have a surplus lowering our debt
and making us more independent. There is also the point of it is not a un-heard of un-tried idea it
happened many times before in history one example being at the beginning of the Tang dynasty in china
Buddhism started to become taxed and it went well the religion obviously didn't die in fact it brought in
new followers and persisted not only in the world but in the same area strongly till the rise of
communism in china. These points and more add to the point that the church should be taxed vote pro.

Will Duterte dare to tax the church?

8SHARES400
- Boo Chanco (The Philippine Star) - July 4, 2016 - 12:00am

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.

 Charitable institutions, churches, convents, mosques, non-profit cemeteries,

lands and buildings and improvements – actually, directly, and exclusively
used for religious, charitable and educational purposes (according to Article
VI, Section 28)

 All income, revenues, assets of non-stock and non-profit educational

institutions used actually, directly and exclusively for educational purposes
and all grants, endowments, donations, contributions (subject to conditions
prescribed by law) used actually, directly and exclusively for educational
purposes (according to Article XIV Section 4)

Religious Institutions buy businesses and real estate now and the former owners paid taxes.Taxpayers
must meet the shortfall as tax exempt takes hold.Governments have no paper trail of real profit and
loss.Why not have the same rules for all operating businesses.Donations to charities fully deductible and
we are all ok.

Argument 2: implications of tax laws

Argument 3: New Testament and Hadith states one should pay taxes sean

Argument 4: what could be taxable within a religious institution jussel

Tax exemptions are limited to those granted by law. However, no law granting any tax exemption
shall be passed without the concurrence of a majority of all the members of the Congress. (Article
VI, Section 28, par. 4). The Constitution expressly grants tax exemption on certain
entities/institutions such as (1) charitable institutions, churches, parsonages or convents
appurtenant thereto, mosques, and nonprofit cemeteries and all lands, buildings and improvements
actually, directly and exclusively used for religious, charitable or educational purposes (Article
VI, Section 28, paragraph 3); (2) non-stock non-profit educational institutions used actually,
directly and exclusively for educational purposes. (Article XVI, Section 4(3))
Speaker Pantaleon Alvarez on Monday said schools run by religious institutions
should also be taxed to improve government’s revenue collection.
In an ambush interview later, Alvarez denied that he wanted to impose taxes on
schools run by religious institution as retribution for the Catholic Church criticizing
the government’s brutal narcotics crackdown that has claimed 7,000 lives.
READ: Catholic Church, rights activists rev up drive vs death penalty, killings
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Alvarez raised this possibility during the hearing of the House of Representatives
ways and means committee attended by a power house of Cabinet secretaries.
The Cabinet led by Finance Secretary Carlos Dominguez III expressed full support for
the administration’s tax reform package that seeks to lower personal income tax, raise
excise tax slapped on oil and vehicles, expand the value-added tax (VAT) base,
among others.
READ: DOF files tax reform package, seeks reduction in income tax
Alvarez slammed the schools run by religious institutions for claiming to be non-stock
and non-profit even while making income from tuition fees.
“Yung religious schools, those registered as non-stock, non-profit. Naniniwala ba tayo
dun? Kahit sino pwede magdeclare ng non-stock non-profit para hindi makapagbayad
(ng tax),” Alvarez said.
(Those religious schools registered as non-stock, non-profit. Do we even believe
them? Any school may register as non-stock non-profit so that they don’t need to pay
taxes.)
“Itong mga schools na ito, they dont cater for the poor. Palagi nag-i-increase ng
tuition fees yan. Ibig sabihin, hindi yan non-stock non-profit. Profitable business yan,”
he added.
(These schools don’t cater to the poor. They always increase their tuition fees. That’s
not non-stock non-profit, that’s profitable business.)
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Alvarez said it’s high time government look at taxing the income from the tuition fees
imposed by these church-run schools.
“Bakit hindi niyo tingnan uli yung non-stock, non-profit, kung totoo ngang non-stock,
non-profit. I think it’s high time i-tax natin ang dapat i-tax,” Alvarez said.
(Why don’t we check out if these schools are really non-stock non-profit, if indeed
these are non-stock non-profit. I think it’s high time we tax these.)
Dominguez told Alvarez, a lawyer, that the 1987 Constitution expressly provides that
Congress is not allowed to tax charitable institutions and churches on its assets and
properties used for religious, charitable or educational purposes.
“Anong basis ng not taxing the schools aside from other income, ‘yung income sa
tuition fees?” Alvarez asked.
(What’s the basis for not taxing schools aside from their other income from tuition
fees?)
Dominguez answered: “It’s in the Constitution, sir.”
According to Section 28 (3) under Article VI or the Legislative Department,
“Charitable institutions, churches and parsonages or convents appurtenant thereto,
mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually,
directly, and exclusively used for religious, charitable, or educational purposes shall
be exempt from taxation.”
Socioeconomic planning Secretary Ernesto Pernia corroborated Dominguez’s position
that the Constitution prohibits taxing tuition fees of church-run schools.
“Revenue from tuition, they are not taxed. But they have revenue from commercial
activities. Those are taxed,” Pernia said.
Dominguez said what is allowed to be taxed are the commercial properties of these
schools not used for educational and religious purposes.
READ: It’s official: VAT exemptions on senior citizens, PWDs retained
Alvarez said there is a need to revisit the constitutional provision on not taxing
schools run by religious institutions.
He urged the Bureau of Internal Revenue to submit to the lower house the income tax
returns of these schools.
Alvarez said there is also a need to look into the shares of stocks of religious
institutions that run up to billions of pesos.
BIR commissioner Caesar Dulay said these income tax returns will have to be tackled
in an executive session.
READ: Dominguez allays fears on negative impact of auto excise tax hike
After the hearing, Alvarez said it is unfair that church-run schools are not taxed on
their income even though these impose more expensive tuition fees than other private
schools.
“Yung mga ibang private schools mababa ‘yung tuition pero bakit pinagbabayad natin
sila ng tax dun sa income nila sa eskwelahan. Pero bakit itong mga run by religious
institutions ang mamahal nung mga tuition fees tapos libre yung income tax. Hindi ba
unfair naman yun sa ibang private schools?” Alvarez said.
(Other private schools impose lower tuition but they pay taxes on their income. Why
are these schools run by religious institutions which impose expensive tuition fees
exempted from income tax? Isn’t that unfair to other private schools?)
He denied suggesting the imposition of taxes on church-run schools as retribution for
the Catholic Church’s criticisms of the administration.
“Inaayos lang natin. Maraming pwedeng sabihin no. Sa akin naman tignan natin from
the perspective na inaayos lang natin yung sistema ng taxation,” Alvarez added.
(We are just fixing our taxation system. A lot can be said about it, but we are coming
from the perspective that we need to fix our taxation system.)
Tax the Church?
Posted by butalidnl on 9 July 2011

There are periodic calls for the government to tax the church. And the church would reply that the government

can’t tax it, because their tax-exempt status is guaranteed in the Constitution and the Internal Revenue Code. If

we look at the Constitution and actual practice, however, the case is not so simple. The Church is not as tax

exempt as they make themselves out to be. They actually pay a lot of taxes: dividends tax, employee

contributions, VAT. But at the same time, there is a lot in terms of property and business taxes that the church

should pay, but doesn’t.

Real Estate Tax Exemption

The constitution mentions church tax exemption in Article 6, Section 28(2):

“Charitable institutions, churches and personages or convents appurtenant thereto, mosques, non-profit

cemeteries, and all land, buildings, and improvements, actually, directly, and exclusively used for religious,

charitable, or educational purposes shall be exempt for taxation.”

Thus, it is clear: church buildings are exempt from real estate tax. Note that this doesn’t refer to “the church” as

an institution, or its constituent dioceses, parishes and congregations, which are entities that are much more than

mere buildings. If we go by the above provision, other church property should be taxed if they are not ‘exclusively’

used for religious purposes. Convents, for example, are subject to property tax. School buildings with a dual

purpose – as residence for priests/nuns and as school, since this is no longer ‘exclusive use’ should also be taxed.

The presence of a chapel in a convent does not make the convent a religious building; it is just an ordinary

residence with a chapel. It is similar to a chapel in a mall – the mall remains a commercial building.
Schools and Hospitals

There is a constitutional provision covering non-stock, non-profit schools. This is found in Article 14, Section 4.

“(3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly, or exclusively

for educational purposes shall be exempt from tax and duties…”

“(4) Subject to conditions prescribed by laws all grants, endowments, donations or contributions used actually,

directly and exclusively for educational purposes shall be exempt from tax.”

Under this provision, all income raised by a non-stock, non-profit school should be used for educational purposes.

Withdrawals from school funds for use by congregations should be prohibited. If they did this, the school should be

stripped of its tax free status; or the congregation should be charged with (technical) theft of the school’s assets.

You would then say: “the school could simply pay the nuns/religious who have school-related functions, and they

could donate this to their congregation. True. Actually, this is what they should do. But the salaries of these

nuns/religious should be comparable that of to the other teachers or administrative staff in the school. Paying them

higher salaries would constitute a ‘withdrawal’ of profits by the congregation, which should not be allowed for a

non-profit, non-stock educational institution.

Note that ‘non-profit, non-stock’ covers also schools that are run by private foundations. It would not be right for

the head of the foundation running a school to build his residence on school premises, and then get paid a very

high salary. So, why should a church congregation be any different?

Then, there is the case of hospitals. Are hospitals included in the term ‘charitable institution’? For me, charitable

institutions would include orphanages, battered women shelters and the like; but hospitals are at best a border line

case. There should be clear guidelines made by the Department of Finance to define when a hospital can be

classified as a charitable institution. Perhaps it should require that the majority of its patients are poor and that

they pay below market-based hospital fees.

It should not be the case that any religious group could simply put up a hospital, run it in a regular manner, collect

high fees from patients, and then claim to be a ‘charitable institution’ exempt from real estate and income taxes.

Political Clout

But in the Philippines today, church run institutions often get away with not paying taxes. Mostly, this is due to the

church’s political clout; most politicians are afraid of going after the church for back taxes. And there is also the

bias in favor of the church by judges. In a recent case filed by the Cebu City government against Perpetual

Succour Hospital (run by religious nuns), the city wanted to collect taxes on the pharmacy and real estate leasing

operations done by the hospital, because these are not covered by the tax exempt status of the hospital. But the

Regional Trial Court ruled that the accounts for these activities are not separate from that of the hospital, and thus
no tax could be collected. Actually, if we were to follow the Constitution, it should be the other way around: since

the hospital is no longer exclusively used for ‘charitable purposes’, it should be taxed as a whole.

The government, through the Department of Finance, could and should implement the law when it comes to the

income and assets of religious institutions. The church should not be allowed a creative interpretation of the tax

laws to make themselves tax-exempt. This is especially so when they operate as non-profit and non-stock

institutions. There may be some laws that need to be amended, but mostly it is just a question of political will. If

the Department of Finance decides to go after the church for back taxes, they will have the Constitution and most

of the laws on their side.

I believe it is high time that the government fully collect the taxes due from dioceses, congregations and the like.

We should not continue with the myth that the church as a whole is tax exempt. This is effectively tax evasion by

the church, and in the present framework of pushing for full tax compliance by everyone, the church should not be

an exception. Otherwise, that will be the same as condoning corruption (in this case, tax evasion), and we don’t

want that to happen. Or do we?

On March 2017, Speaker Pantaleon Alvarez made it to headlines as he talked about a controversial issue
concerning different religious institutions in the Philippines.

“Yung religious schools, those registered as non-stock, non-profit. Naniniwala ba

tayo dun? Kahit sino pwede magdeclare ng non-stock non-profit para hindi
makapagbayad (ng tax),” Alvarez said.
“Itong mga schools na ito, they dont cater for the poor. Palagi nag-i-increase ng tuition fees yan. Ibig
sabihin, hindi yan non-stock non-profit. Profitable business yan,” he added.

“Bakit hindi niyo tingnan uli yung non-stock, non-profit, kung totoo ngang non-stock,
non-profit. I think it’s high time i-tax natin ang dapat i-tax,” Alvarez said.

In this issue, Alvarez slammed the schools run by religious institutions for claiming to be non-stock and
non-profit even while making income from tuition fees. With this, the issue taxing religious institutions
were brought again in our society. Duterte during the pre-election period threatened the church as he is
having multiple conflict with them. We believe that this is still a timely topic as we are still in the
Duterte’s administration. Today, we are going to discuss matters and how our group believes that

Religious institutions’ activities should be taxed.