Learning From Duterte: If a Religious Institution Acts Like a Business, it Should be Taxed Like One

Philippine President Rodrigo Duterte has launched another rhetorical attack on the Roman Catholic Church in The Philippines by calling into question the Church’s record of fleecing the poorest Filipinos in spite of the fact that poverty remains rife across multiple regions of the developing country. According to Duterte,

“When someone is baptised, you have to pay…when someone dies, you have to pay. You build a chapel in your own house and pray there. You don’t have to go to the church to pay for these idiots”.

Duterte’s criticism becomes all the more meaningful when one realises that the Roman Catholic Church in The Philippines has a net worth of over P100 billion (around 2 billion in US Dollars). By demanding money from even the poorest Filipinos for the kinds of clerical duties that Duterte accurately listed, the Church has invested its earnings in a blue chip stock portfolio that allows it to accrue levels of wealth that would make many big businesses envious. Crucially, all of this is achieved without the Church having to pay any taxation.

Veteran diplomat and journalist Rigoberto Tiglao recently proposed the following elegant solution to the wealth gap between the faithful and those preaching to them:

“Why doesn’t the Church use even a small part of its vast wealth to feed the poor, with real food, and not just silly pious words?

A program to feed the poor isn’t complicated, and the Church has the infrastructure to do it: its parish churches, ubiquitous even in the poorest urban slum communities as well as its schools, both spread all over the archipelago. With its money and with the free labor it always manages to get (who cleans the priests’ toilets anyway?), it can set up what’s called soup kitchens, maybe in our case lugaw centers, free for anybody who cares for it, at least every of its Sabbath day but ideally – and “doable” with its wealth – every single day of the year.

Here’s my computation for this endeavor, which doesn’t even have to consume its assets, but only interest from these. A low 5 percent annual income on its P100 billion assets, will generate P5 billion every year. Divide that by the 365 days in a year and it will mean P14 million it can spend every day for soup kitchens. How many poor Filipinos (allowed to eat there only once a day) will that P14 million feed? At just P15 per lugaw, that would mean 1 million Filipinos fed every single day”.

And yet while Tiglao’s solution would help to put the Church’s vast wealth to good use, the organisation shows no signs of volunteering to contribute to such a public welfare initiative – just like few businesses would do so unless compelled under the penalty of law.

The difference is that a religious institution is in theory not a business and it is this theory which has led to most religious institutions enjoying tax exempt status in countries like The Philippines as well as in the United States, for example. And yet unless one’s nation has an official religion or a state owned religious institution, it is downright hypocritical to treat religious institutions as anything other than a business or a charity. This statement is not meant to offend believers who genuinely feel that their house of worship is something more than an ordinary business or charity, but if the eyes of the law took people’s emotions into consideration when determining taxation rules, one would be faced with thousands of arguments regarding why various businesses or products have an emotional value that should allow for the granting of tax exempt status. Furthermore, taxing a religious institution that functions like any other business in the service industry is not an infringement on the freedom of religion anymore than taxing a traditional business is an infringement on one’s ability to exercise his or her rights to conduct commerce in the free market.

Therefore, one needs to approach the relationship between religious institutions and taxation in a manner akin to the old adage “if it looks like a duck and quacks like a duck – it is a duck”. As such, if a religious institution like the Roman Catholic Church in The Philippines acts like a business, sells services (such as the ones listed by Duterte) like a business and has a large stock portfolio like a business, then it should be treated like a business for tax purposes. To understand this, one should just consider the following. In countries like the United States, privately owned yoga schools and yoga studios are taxed in the same way that a boxing gym is taxed. Yet yoga is a religious practice in Hinduism while boxing is a secular sport. But in the eyes of the law ‘1st Street Yoga’ and ‘2nd Street Boxing Gym’ are treated the same. Yet if places of religion are treated differently than businesses, should not ‘1st Street Yoga’ be exempted from taxation?

While some might argue that while Hinduism isn’t indigenous to countries like The Philippines or the USA, neither is Christianity. In the case of The Philippines, it was the Spanish Empire that brought Catholicism to the land while in the Americas it was also the Spanish along with other European colonists who arrived with a Bible in one hand and a gun in the other. In any case, a society that allows for the freedom of religion should not pick and choose which religious organisations to tax based on a preference for faiths falsely described as being indigenous.

Of course, if a religious institution were to allow itself to be audited and renounced profit, then it would be perfectly reasonable to offer such an institution tax exempt status in the same way that a secular charity can easily attain the same. The fact of the matter therefore is that while there are certainly good individuals in many religious institutions, at an organisational level, the Roman Catholic Church in The Philippines functions like a business in the service industry rather than a charity.

While food is important to the hungry man and shoes are important to the working man, grocery stores and shoe stores are not given tax exempt status just because they sell products that are important to people’s lives. Likewise, just because a religious institution offers a service that is considered important to some people, this should not change the fundamental relationship between church and state in countries with a legal separation between church and state.

Once again, Duterte makes a strong point. If one truly believes in the Christian faith, there is nothing prohibiting one from worshipping at home – for free.

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