Non-Religious Tax Avoidance

At the Atheist Foundation of Australia (AFA) Convention in Melbourne on 14 April 2012 Geoffrey Robertson QC turned his mind to the tax-exempt status of religion. He joked that:

Atheist foundations could qualify for tax exemption by declaring their belief in Christopher Hitchens! Turn him into an L. Ron Hubbard figure to be worshipped through his sacred books!

It got a good laugh. It never occurred to Robertson, or the Convention audience, that the AFA, like all religions in Australia with a supernatural belief, might already be tax-exempt.

The fact is the AFA had applied to the Australian Tax Office (ATO) for tax-exempt status from 1997. The Australian Atheist of September 1999 reported that its application to the tax office as either a charitable 'religious or educational institution' had not been approved but that:

...based on the information provided, we confirm that the Atheist Foundation of Australia Inc does not qualify as a 'charitable institution for the advancement of either religion or education', a religious institution or a public educational institution. However, we do recognise for taxation purposes that your Association is principally a scientific institution for the 'study of the science of philosophy and the propagation of outcomes' for a public purpose.

The AFA's decision to apply for tax-exempt status began in 1996 when The Australian Atheist of December that year reported with some indignation that 50 per cent of the interest on a $5,000 deposit with a major bank had been lost as taxable income to the ATO. That began two years of negotiations with the ATO which finally led to the 12 July 1999 determination cited above.

The question I am posing here is whether the pursuit of tax-exempt status by non-religious organisations such as the AFA, humanists, rationalists et al is consistent with secularism. I argue it is not. It is neither here nor there that the tax-exempt status is achieved either as a charitable organisation or other not-for-profit organisation as the result is the same: taxpayer subsidy of non-religious belief or non-belief. I use the term 'non-belief' here to accommodate those atheists who believe their atheism is not a belief.

This move by the AFA to be recognised as either a 'charitable institution for the advancement of either religion or education' was bizarre to say the least. From its inception the AFA had of course been highly critical of religion. Its early newsletters consisted mainly of photocopied press clippings which illustrated the worst aspects of religion.

Just why the AFA in 1997 contemplated identifying itself for tax purposes as possibly a religious institution indicates a serious muddle-headedness. It seems the requirement to pay tax on its bank interest was more important than simple intellectual consistency i.e. it is contradictory to pose as the very thing you're against, especially when the loss involved is not all that serious and taxation itself, while irksome, is a public good.

It was also muddle-headed because not much later the AFA would re-publish Richard Lead's 1998 'Oasis of Privilege' from The Skeptic magazine where he detailed and excoriated the tax exemptions for religion. Also, in the June 1999 issue of The Australian Atheist Claude Voarino's article 'Is Atheism a Religion?' was published where he concluded:

…the philosophy and the aims of the Atheist Foundation of Australia, printed on the inside of the front cover of each issue of The Australian Atheist, are yet another clear indication that atheism is not a belief, a faith  or a religion. Therefore, we have to agree with the Australian Taxation Office that the AFA doesn't qualify as a tax-exemptible [sic] institution.

He concluded, correctly in my view, 'the same should definitely be the case for all religious organisations in this country and elsewhere!'But, by then, the AFA's application to the ATO to be recognised as either a charitable religious or educational institution had been transformed by the ATO into acceptance as a 'scientific institution' for the pursuit of 'the science of philosophy.'

This raises another problem. It concerns the ATO's current illustration of what a 'scientific institution' is. Their website illustrates their 2012 position by way of an example:

An institution is set up to hold conferences and meetings on aspects of engineering. Any professional advantage the engineer members gain is only through the institution's advancement of science.

This is contrasted to a 'scientific association'. The example they give is:

A group of frog enthusiasts set up a non-profit society to  observe frogs in the district and record changes in their types, numbers and habits. The society is established for the encouragement of science.

These current definitions seem a long way from the characterisation of the AFA by the ATO as a 'principally scientific institution established for the study of the science of philosophy and the propagation of study outcomes for a public purpose.'

Were a like-minded secular organisation to apply for tax-exempt status today based on the 1999 definition, it would seem unlikely to succeed.

At the heart of the AFA's 1997 complaint was the idea that since religion obtained tax-exempt status and atheism could not, this was a clear example of discrimination. The argument was made in the article 'Taxing the Godless Religiously' by Samela Harris in issue 88 of The Atheist Newsletter. The problem with thisprima facie discrimination argument is that it overlooks the other more secular possibility stated by Geoffrey Robertson at the Atheist Convention,

... the proper answer to this egregious discrimination is to abolish tax breaks for all religions.

If no belief or non-belief organisation is receiving tax breaks, I argue, then the government's relationship to both religion and atheism etc. is strictly secular: it favours none of them because what citizens believe or do not believe should be no business of government. As taxpayers we should not be cross-subsidising each other's belief, or lack of it.

This approach would have the benefit of cutting the ground beneath the feet of the religionist smear that secularism, as a form of government, is anti-religion. If no one is receiving tax exemption on the grounds of their belief or lack of it, government is strictly neutral and discrimination disappears.

In appealing for tax-exempt status, while at the same time decrying the tax-exempt status of religion through its publications, the AFA was, and remains, in my view, compromised.

To add more irony to the mix, a journalist contacted me recently and pointed out that the Australian Securities Investment Commission website shows that the Australian Christian Lobby (ACL) received tax-exempt status as a religious organisation in 2005. They have kept quiet about it. So two diametrically opposed organisations – AFA and the ACL – are both tax-exempt.

Furthermore, academics at the not-for-profit research centre in the law school at the University of Melbourne have noticed and criticised the fact that the legislation creating the new Australian National Charities Commission (ACNC) has a section which exempts religious organisations from reporting requirements, whereas all other charities have to reveal their financial details. This could explain why the Catholic Church who first opposed a Charities Commission now supports it: it looks like they have been lobbying behind the scenes for this special privilege for religion.

This means the ACL will also be exempted from reporting requirements. When I asked, the ACNC informed me they will not be registering or regulating other not-for-profit organisations for the foreseeable future. This means the AFA and other secular not-for-profits will not be exposed to public scrutiny in the same way that religions have been exempted. That, of course, is a government decision.

Conclusion: Why does this matter?

In 2009 Perkins and Gomez estimated the annual gross cost of religion to the Australian taxpayers is $31B per annum.¹ This year, inFree Inquiry, Professor Ryan Cragun and his associates estimated the cost of religion to the United States is $71B per annum².The likely reason the Australian figure is so comparatively high is that we subsidise religious schools whereas, with some qualification, the United States does not.

The net cost of religion to Australian, US and taxpayers around the world would run into billions in each developed nation. At the same time all nations are running budget deficits, many of them huge with no obvious means of repayment. In order to rein these deficits in, governments are cutting back on health, education other welfare related expenditure and raising taxes. A significant part of the reason that governments are strapped for cash has been tax evasion and avoidance. Tax exemptions for wealthy religions are a part of the problem.

When secular organisations also seek to avoid paying tax they are effectively accepting thirty pieces of silver even though the tax they avoid is trivial in comparison to the missing revenue of religious tax exemptions. They are short-selling democracy because taxation is the means by which governments can redistribute some of that revenue for the benefit of citizens, who, for whatever reason, cannot compete in our class-based meritocracy. As Greens leader, Christine Milne, said at the National Press Club on 26 September 2012:

Tax is not a dirty word ... It is part of being a fair and sensible society that invests in caring for its own and preparing for the future.

Second, they are putting self-interest ahead of the bigger picture: the need to create truly secular governments that get out of the business of subsidising belief or non-belief. This subsidy rests on the ancient and specious grounds, that subsidising peoples' private, personal commitments is a public benefit.

That idea has its origins in the 17th century Statute of Charitable Uses when the religiosity of the monarch's subjects was assumed as a given. It is irrelevant in the 21st century.

If we are to further discuss these questions, all the issues, including the tax avoidance of the non-religious, should be put on the table. If we do not, it will not be long before the religious justify their tax exemptions on the grounds that our hands are in the taxpayers' till too.